Correlation Between Ross Stores and U Power

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

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

Diversification Opportunities for Ross Stores and U Power

-0.39

Correlation Coefficient

Ross Stores  U Power

Very good diversification

The 3 months correlation between Ross and UCAR is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores 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 Ross Stores 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 Ross Stores 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 Ross Stores i.e., Ross Stores and U Power go up and down completely randomly.

Pair Corralation between Ross Stores and U Power

Given the investment horizon of 90 days Ross Stores is expected to generate 0.4 times more return on investment than U Power. However, Ross Stores is 2.49 times less risky than U Power. It trades about 0.26 of its potential returns per unit of risk. U Power Limited is currently generating about 0.1 per unit of risk. If you would invest  14,199  in Ross Stores on September 15, 2024 and sell it today you would earn a total of  1,154  from holding Ross Stores or generate 8.13% return on investment over 90 days.

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

Ross Stores  vs.  U Power Limited

Ross Stores

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ross Stores has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ross Stores is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

U Power Limited

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in U Power Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, U Power reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ross Stores and U Power

The main advantage of trading using opposite Ross Stores and U Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores 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 Ross Stores 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.