Correlation Between U Power and Franklin Wireless

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

Diversification Opportunities for U Power and Franklin Wireless

-0.11

Correlation Coefficient

U Power  Franklin Wireless

Good diversification

The 3 months correlation between UCAR and Franklin is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding U Power Limited and Franklin Wireless Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Wireless Corp 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 Franklin Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Wireless Corp has no effect on the direction of U Power i.e., U Power and Franklin Wireless go up and down completely randomly.

Pair Corralation between U Power and Franklin Wireless

Given the investment horizon of 90 days U Power Limited is expected to generate 28.17 times more return on investment than Franklin Wireless. However, U Power is 28.17 times more volatile than Franklin Wireless Corp. It trades about 0.04 of its potential returns per unit of risk. Franklin Wireless Corp is currently generating about 0.08 per unit of risk. If you would invest  15,400  in U Power Limited on August 26, 2024 and sell it today you would lose (14,784) from holding U Power Limited or give up 96.0% of portfolio value over 90 days.

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

U Power Limited  vs.  Franklin Wireless Corp

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.

Franklin Wireless Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Wireless Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Franklin Wireless is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with U Power and Franklin Wireless

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

The idea behind U Power Limited and Franklin Wireless Corp 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.