Correlation Between U Power and Eastman Chemical

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

Diversification Opportunities for U Power and Eastman Chemical

-0.21

Correlation Coefficient

U Power  Eastman Chemical

Very good diversification

The 3 months correlation between UCAR and Eastman is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding U Power Limited and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical 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 Eastman Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Chemical has no effect on the direction of U Power i.e., U Power and Eastman Chemical go up and down completely randomly.

Pair Corralation between U Power and Eastman Chemical

Given the investment horizon of 90 days U Power Limited is expected to generate 3.09 times more return on investment than Eastman Chemical. However, U Power is 3.09 times more volatile than Eastman Chemical. It trades about 0.04 of its potential returns per unit of risk. Eastman Chemical is currently generating about -0.11 per unit of risk. If you would invest  678.00  in U Power Limited on September 18, 2024 and sell it today you would earn a total of  30.00  from holding U Power Limited or generate 4.42% 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.  Eastman Chemical

U Power Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in U Power Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, U Power may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Eastman Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastman Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with U Power and Eastman Chemical

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

The idea behind U Power Limited and Eastman Chemical 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.