Correlation Between Aurora Mobile and Pagaya Technologies

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

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

Diversification Opportunities for Aurora Mobile and Pagaya Technologies

-0.23

Correlation Coefficient

Aurora Mobile  Pagaya Technologies

Very good diversification

The 3 months correlation between Aurora and Pagaya is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Mobile and Pagaya Technologies Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pagaya Technologies 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 Pagaya Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pagaya Technologies has no effect on the direction of Aurora Mobile i.e., Aurora Mobile and Pagaya Technologies go up and down completely randomly.

Pair Corralation between Aurora Mobile and Pagaya Technologies

Allowing for the 90-day total investment horizon Aurora Mobile is expected to generate 18.84 times less return on investment than Pagaya Technologies. But when comparing it to its historical volatility, Aurora Mobile is 1.77 times less risky than Pagaya Technologies. It trades about 0.0 of its potential returns per unit of risk. Pagaya Technologies Ltd is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  23.00  in Pagaya Technologies Ltd on October 6, 2024 and sell it today you would earn a total of  0.00  from holding Pagaya Technologies Ltd or generate 0.0% 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.  Pagaya Technologies Ltd

Aurora Mobile

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aurora Mobile has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pagaya Technologies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pagaya Technologies Ltd are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Pagaya Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aurora Mobile and Pagaya Technologies

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

The idea behind Aurora Mobile and Pagaya Technologies Ltd 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.