Correlation Between United Fire and U Power
Can any of the company-specific risk be diversified away by investing in both United Fire and U Power at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining United Fire and U Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Fire Group and U Power Limited, you can compare the effects of market volatilities on United Fire and U Power and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in United Fire with a short position of U Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Fire and U Power.
Diversification Opportunities for United Fire and U Power
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and UCAR is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding United Fire Group and U Power Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Power Limited and United Fire is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on United Fire Group are associated (or correlated) with U Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Power Limited has no effect on the direction of United Fire i.e., United Fire and U Power go up and down completely randomly.
Pair Corralation between United Fire and U Power
Given the investment horizon of 90 days United Fire Group is expected to generate 0.47 times more return on investment than U Power. However, United Fire Group is 2.15 times less risky than U Power. It trades about -0.01 of its potential returns per unit of risk. U Power Limited is currently generating about -0.07 per unit of risk. If you would invest 2,718 in United Fire Group on January 7, 2025 and sell it today you would lose (24.00) from holding United Fire Group or give up 0.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Fire Group vs. U Power Limited
Performance |
| Timeline |
| United Fire Group |
| U Power Limited |
United Fire and U Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Fire and U Power
The main advantage of trading using opposite United Fire and U Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Fire position performs unexpectedly, U Power can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in U Power will offset losses from the drop in U Power's long position.| United Fire vs. Donegal Group B | United Fire vs. Horace Mann Educators | United Fire vs. Donegal Group A | United Fire vs. Global Indemnity PLC |
| U Power vs. Kaixin Auto Holdings | U Power vs. Uxin | U Power vs. SunCar Technology Group | U Power vs. Carvana Co |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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