Correlation Between SentinelOne and Aurora Mobile

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

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

Diversification Opportunities for SentinelOne and Aurora Mobile

-0.17

Correlation Coefficient

SentinelOne  Aurora Mobile

Good diversification

The 3 months correlation between SentinelOne and Aurora is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Aurora Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Mobile and SentinelOne 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 SentinelOne 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 SentinelOne i.e., SentinelOne and Aurora Mobile go up and down completely randomly.

Pair Corralation between SentinelOne and Aurora Mobile

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the Aurora Mobile. But the stock apears to be less risky and, when comparing its historical volatility, SentinelOne is 3.2 times less risky than Aurora Mobile. The stock trades about -0.08 of its potential returns per unit of risk. The Aurora Mobile is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  659.00  in Aurora Mobile on September 22, 2024 and sell it today you would lose (71.00) from holding Aurora Mobile or give up 10.77% of portfolio value over 90 days.

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

SentinelOne  vs.  Aurora Mobile

SentinelOne

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SentinelOne has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SentinelOne is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Aurora Mobile

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Mobile are ranked lower than 5 (%) 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 SentinelOne and Aurora Mobile

The main advantage of trading using opposite SentinelOne and Aurora Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SentinelOne 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 SentinelOne 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.

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.