Correlation Between Euronet Worldwide and Aurora Mobile

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

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

Diversification Opportunities for Euronet Worldwide and Aurora Mobile

-0.18

Correlation Coefficient

Euronet Worldwide  Aurora Mobile

Good diversification

The 3 months correlation between Euronet and Aurora is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Euronet Worldwide and Aurora Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Mobile and Euronet Worldwide 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 Euronet Worldwide 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 Euronet Worldwide i.e., Euronet Worldwide and Aurora Mobile go up and down completely randomly.

Pair Corralation between Euronet Worldwide and Aurora Mobile

Given the investment horizon of 90 days Euronet Worldwide is expected to generate 146.44 times less return on investment than Aurora Mobile. But when comparing it to its historical volatility, Euronet Worldwide is 7.18 times less risky than Aurora Mobile. It trades about 0.01 of its potential returns per unit of risk. Aurora Mobile is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  422.00  in Aurora Mobile on September 1, 2024 and sell it today you would earn a total of  396.00  from holding Aurora Mobile or generate 93.84% return on investment over 90 days.

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

Euronet Worldwide  vs.  Aurora Mobile

Euronet Worldwide

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Euronet Worldwide has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Euronet Worldwide is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Aurora Mobile

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Mobile are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal 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 Euronet Worldwide and Aurora Mobile

The main advantage of trading using opposite Euronet Worldwide and Aurora Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Euronet Worldwide 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 Euronet Worldwide 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.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.