Correlation Between GigaCloud Technology and Aurora Mobile

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

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

Diversification Opportunities for GigaCloud Technology and Aurora Mobile

0.71

Correlation Coefficient

GigaCloud Technology  Aurora Mobile

Poor diversification

The 3 months correlation between GigaCloud and Aurora is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding GigaCloud Technology Class and Aurora Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Mobile and GigaCloud Technology 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 GigaCloud Technology Class 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 GigaCloud Technology i.e., GigaCloud Technology and Aurora Mobile go up and down completely randomly.

Pair Corralation between GigaCloud Technology and Aurora Mobile

Considering the 90-day investment horizon GigaCloud Technology is expected to generate 4.83 times less return on investment than Aurora Mobile. But when comparing it to its historical volatility, GigaCloud Technology Class is 2.1 times less risky than Aurora Mobile. It trades about 0.05 of its potential returns per unit of risk. Aurora Mobile is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  715.00  in Aurora Mobile on August 30, 2024 and sell it today you would earn a total of  104.00  from holding Aurora Mobile or generate 14.55% return on investment over 90 days.

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

GigaCloud Technology Class  vs.  Aurora Mobile

GigaCloud Technology

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GigaCloud Technology Class are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, GigaCloud Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Aurora Mobile

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Mobile are ranked lower than 12 (%) 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 GigaCloud Technology and Aurora Mobile

The main advantage of trading using opposite GigaCloud Technology and Aurora Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaCloud Technology 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 GigaCloud Technology Class 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.