Correlation Between U Power and Chemours

Can any of the company-specific risk be diversified away by investing in both U Power and Chemours 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 Chemours 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 Chemours Co, you can compare the effects of market volatilities on U Power and Chemours 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 Chemours. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Power and Chemours.

Diversification Opportunities for U Power and Chemours

-0.12

Correlation Coefficient

U Power  Chemours

Good diversification

The 3 months correlation between UCAR and Chemours is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding U Power Limited and Chemours Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours 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 Chemours. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemours has no effect on the direction of U Power i.e., U Power and Chemours go up and down completely randomly.

Pair Corralation between U Power and Chemours

Given the investment horizon of 90 days U Power Limited is expected to under-perform the Chemours. In addition to that, U Power is 1.79 times more volatile than Chemours Co. It trades about -0.19 of its total potential returns per unit of risk. Chemours Co is currently generating about 0.12 per unit of volatility. If you would invest  2,031  in Chemours Co on September 5, 2024 and sell it today you would earn a total of  132.00  from holding Chemours Co or generate 6.5% return on investment over 90 days.

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

U Power Limited  vs.  Chemours Co

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.

Chemours

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chemours Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Chemours exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with U Power and Chemours

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

The idea behind U Power Limited and Chemours Co 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 Transaction History module to view history of all your transactions and understand their impact on performance.