Correlation Between Dana and U Power

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

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

Diversification Opportunities for Dana and U Power

-0.4

Correlation Coefficient

Dana  U Power

Very good diversification

The 3 months correlation between Dana and UCAR is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Dana Inc 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 Dana 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 Dana Inc 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 Dana i.e., Dana and U Power go up and down completely randomly.

Pair Corralation between Dana and U Power

Considering the 90-day investment horizon Dana Inc is expected to under-perform the U Power. But the stock apears to be less risky and, when comparing its historical volatility, Dana Inc is 1.07 times less risky than U Power. The stock trades about -0.12 of its potential returns per unit of risk. The U Power Limited is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  646.00  in U Power Limited on August 22, 2024 and sell it today you would lose (2.00) from holding U Power Limited or give up 0.31% of portfolio value over 90 days.

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

Dana Inc  vs.  U Power Limited

Dana Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dana Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

U Power Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in U Power Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, U Power is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Dana and U Power

The main advantage of trading using opposite Dana and U Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dana 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 Dana Inc 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.