Correlation Between United Homes and U Power
Can any of the company-specific risk be diversified away by investing in both United Homes 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 Homes 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 Homes Group and U Power Limited, you can compare the effects of market volatilities on United Homes 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 Homes with a short position of U Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Homes and U Power.
Diversification Opportunities for United Homes and U Power
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and UCAR is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding United Homes 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 Homes 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 Homes 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 Homes i.e., United Homes and U Power go up and down completely randomly.
Pair Corralation between United Homes and U Power
Considering the 90-day investment horizon United Homes Group is expected to under-perform the U Power. But the stock apears to be less risky and, when comparing its historical volatility, United Homes Group is 15.53 times less risky than U Power. The stock trades about -0.02 of its potential returns per unit of risk. The U Power Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,450 in U Power Limited on September 12, 2024 and sell it today you would lose (1,702) from holding U Power Limited or give up 69.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Homes Group vs. U Power Limited
Performance |
| Timeline |
| United Homes Group |
| U Power Limited |
United Homes and U Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Homes and U Power
The main advantage of trading using opposite United Homes and U Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Homes 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 Homes vs. Microbot Medical | United Homes vs. Hudson Pacific Properties | United Homes vs. Thai Beverage PCL | United Homes vs. Franklin Wireless Corp |
| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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