Correlation Between Aurora Mobile and CiT

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

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

Diversification Opportunities for Aurora Mobile and CiT

0.68

Correlation Coefficient

Aurora Mobile  CiT

Poor diversification

The 3 months correlation between Aurora and CiT is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Mobile and CiT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CiT Inc 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 CiT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CiT Inc has no effect on the direction of Aurora Mobile i.e., Aurora Mobile and CiT go up and down completely randomly.

Pair Corralation between Aurora Mobile and CiT

Allowing for the 90-day total investment horizon Aurora Mobile is expected to generate 8.75 times more return on investment than CiT. However, Aurora Mobile is 8.75 times more volatile than CiT Inc. It trades about 0.1 of its potential returns per unit of risk. CiT Inc is currently generating about 0.02 per unit of risk. If you would invest  668.00  in Aurora Mobile on December 27, 2024 and sell it today you would earn a total of  340.00  from holding Aurora Mobile or generate 50.9% return on investment over 90 days.

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

Aurora Mobile  vs.  CiT Inc

Aurora Mobile

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Mobile are ranked lower than 7 (%) 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.

CiT Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CiT Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, CiT is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Aurora Mobile and CiT

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

The idea behind Aurora Mobile and CiT Inc 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.