Correlation Between U Power and AutoCanada

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

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

Diversification Opportunities for U Power and AutoCanada

-0.06

Correlation Coefficient

U Power  AutoCanada

Good diversification

The 3 months correlation between UCAR and AutoCanada is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding U Power Limited and AutoCanada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoCanada and U Power 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 U Power Limited are associated (or correlated) with AutoCanada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoCanada has no effect on the direction of U Power i.e., U Power and AutoCanada go up and down completely randomly.

Pair Corralation between U Power and AutoCanada

Given the investment horizon of 90 days U Power Limited is expected to under-perform the AutoCanada. In addition to that, U Power is 2.38 times more volatile than AutoCanada. It trades about -0.19 of its total potential returns per unit of risk. AutoCanada is currently generating about 0.29 per unit of volatility. If you would invest  1,186  in AutoCanada on September 5, 2024 and sell it today you would earn a total of  143.00  from holding AutoCanada or generate 12.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

U Power Limited  vs.  AutoCanada

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 current stock price agitation, may contribute to short-term losses for the retail investors.

AutoCanada

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AutoCanada are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward indicators, AutoCanada reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with U Power and AutoCanada

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

The idea behind U Power Limited and AutoCanada 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.