Correlation Between Uxin and U Power

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

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

Diversification Opportunities for Uxin and U Power

0.25

Correlation Coefficient

Uxin  U Power

Modest diversification

The 3 months correlation between Uxin and UCAR is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Uxin 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 Uxin 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 Uxin 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 Uxin i.e., Uxin and U Power go up and down completely randomly.

Pair Corralation between Uxin and U Power

Given the investment horizon of 90 days Uxin is expected to generate 16.46 times less return on investment than U Power. But when comparing it to its historical volatility, Uxin is 6.7 times less risky than U Power. It trades about 0.02 of its potential returns per unit of risk. U Power Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. 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 Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Uxin  vs.  U Power Limited

Uxin

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Uxin are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward indicators, Uxin displayed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Uxin and U Power

The main advantage of trading using opposite Uxin and U Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uxin 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 Uxin 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.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.