Correlation Between Aurora Mobile and Okta

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

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

Diversification Opportunities for Aurora Mobile and Okta

0.74

Correlation Coefficient

Aurora Mobile  Okta

Poor diversification

The 3 months correlation between Aurora and Okta is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Mobile and Okta Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Okta 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 Okta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Okta Inc has no effect on the direction of Aurora Mobile i.e., Aurora Mobile and Okta go up and down completely randomly.

Pair Corralation between Aurora Mobile and Okta

Allowing for the 90-day total investment horizon Aurora Mobile is expected to generate 9.39 times more return on investment than Okta. However, Aurora Mobile is 9.39 times more volatile than Okta Inc. It trades about 0.08 of its potential returns per unit of risk. Okta Inc is currently generating about 0.13 per unit of risk. If you would invest  726.00  in Aurora Mobile on November 27, 2024 and sell it today you would earn a total of  279.00  from holding Aurora Mobile or generate 38.43% 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.  Okta 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 6 (%) 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.

Okta Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Okta Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Okta sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aurora Mobile and Okta

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

The idea behind Aurora Mobile and Okta 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.

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.