Correlation Between Uber Technologies and China Health

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

By analyzing existing cross correlation between Uber Technologies and China Health Industries, you can compare the effects of market volatilities on Uber Technologies and China Health 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 Uber Technologies with a short position of China Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uber Technologies and China Health.

Diversification Opportunities for Uber Technologies and China Health

0.69

Correlation Coefficient

Uber Technologies  China Health

Poor diversification

The 3 months correlation between Uber and China is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies and China Health Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Health Industries and Uber Technologies 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 Uber Technologies are associated (or correlated) with China Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Health Industries has no effect on the direction of Uber Technologies i.e., Uber Technologies and China Health go up and down completely randomly.

Pair Corralation between Uber Technologies and China Health

Given the investment horizon of 90 days Uber Technologies is expected to under-perform the China Health. But the stock apears to be less risky and, when comparing its historical volatility, Uber Technologies is 1.28 times less risky than China Health. The stock trades about -0.22 of its potential returns per unit of risk. The China Health Industries is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  33.00  in China Health Industries on September 30, 2024 and sell it today you would lose (5.00) from holding China Health Industries or give up 15.15% of portfolio value over 90 days.

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

Uber Technologies  vs.  China Health Industries

Uber Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Uber Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

China Health Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Health Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Uber Technologies and China Health

The main advantage of trading using opposite Uber Technologies and China Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uber Technologies position performs unexpectedly, China Health 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 China Health will offset losses from the drop in China Health's long position.

The idea behind Uber Technologies and China Health Industries 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..