Correlation Between EBay and U Power

Can any of the company-specific risk be diversified away by investing in both EBay 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 EBay and U Power into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between eBay Inc and U Power Limited, you can compare the effects of market volatilities on EBay 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 EBay with a short position of U Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of EBay and U Power.

Diversification Opportunities for EBay and U Power

-0.41

Correlation Coefficient

EBay  U Power

Very good diversification

The 3 months correlation between EBay and UCAR is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding eBay Inc 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 EBay 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 eBay Inc 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 EBay i.e., EBay and U Power go up and down completely randomly.

Pair Corralation between EBay and U Power

Given the investment horizon of 90 days eBay Inc is expected to generate 0.38 times more return on investment than U Power. However, eBay Inc is 2.65 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 0.0 per unit of risk. If you would invest  6,367  in eBay Inc on September 26, 2024 and sell it today you would earn a total of  11.00  from holding eBay Inc or generate 0.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

eBay Inc  vs.  U Power Limited

eBay Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days eBay Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, EBay is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

U Power Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days U Power Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, U Power is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with EBay and U Power

The main advantage of trading using opposite EBay and U Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EBay 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.

The idea behind eBay Inc and U Power Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.