Correlation Between Fuse Science and Aurora Mobile

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

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

Diversification Opportunities for Fuse Science and Aurora Mobile

-0.42

Correlation Coefficient

Fuse Science  Aurora Mobile

Very good diversification

The 3 months correlation between Fuse and Aurora is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Fuse Science and Aurora Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Mobile and Fuse Science 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 Fuse Science are associated (or correlated) with Aurora Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Mobile has no effect on the direction of Fuse Science i.e., Fuse Science and Aurora Mobile go up and down completely randomly.

Pair Corralation between Fuse Science and Aurora Mobile

Given the investment horizon of 90 days Fuse Science is expected to generate 2.42 times less return on investment than Aurora Mobile. But when comparing it to its historical volatility, Fuse Science is 1.1 times less risky than Aurora Mobile. It trades about 0.06 of its potential returns per unit of risk. Aurora Mobile is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  507.00  in Aurora Mobile on November 19, 2024 and sell it today you would earn a total of  675.00  from holding Aurora Mobile or generate 133.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.72%
Values	Daily Returns

Fuse Science  vs.  Aurora Mobile

Fuse Science

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fuse Science are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Fuse Science reported solid returns over the last few months and may actually be approaching a breakup point.

Aurora Mobile

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Mobile are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Aurora Mobile reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fuse Science and Aurora Mobile

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

The idea behind Fuse Science and Aurora Mobile 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.