Correlation Between Aurora Mobile and BIO Key

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

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

Diversification Opportunities for Aurora Mobile and BIO Key

-0.37

Correlation Coefficient

Aurora Mobile  BIO Key

Very good diversification

The 3 months correlation between Aurora and BIO is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Mobile and BIO Key International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIO Key International and Aurora Mobile 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 Aurora Mobile are associated (or correlated) with BIO Key. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIO Key International has no effect on the direction of Aurora Mobile i.e., Aurora Mobile and BIO Key go up and down completely randomly.

Pair Corralation between Aurora Mobile and BIO Key

Allowing for the 90-day total investment horizon Aurora Mobile is expected to generate 1.35 times more return on investment than BIO Key. However, Aurora Mobile is 1.35 times more volatile than BIO Key International. It trades about 0.1 of its potential returns per unit of risk. BIO Key International is currently generating about 0.06 per unit of risk. If you would invest  630.00  in Aurora Mobile on December 26, 2024 and sell it today you would earn a total of  409.00  from holding Aurora Mobile or generate 64.92% return on investment over 90 days.

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

Aurora Mobile  vs.  BIO Key International

Aurora Mobile

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Mobile are ranked lower than 8 (%) 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.

BIO Key International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BIO Key International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, BIO Key demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aurora Mobile and BIO Key

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

The idea behind Aurora Mobile and BIO Key International 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.