Correlation Between BLOCK INC and Aurora Mobile

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

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

Diversification Opportunities for BLOCK INC and Aurora Mobile

0.3

Correlation Coefficient

BLOCK INC  Aurora Mobile

Weak diversification

The 3 months correlation between BLOCK and Aurora is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding BLOCK INC and Aurora Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Mobile and BLOCK INC 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 BLOCK INC 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 BLOCK INC i.e., BLOCK INC and Aurora Mobile go up and down completely randomly.

Pair Corralation between BLOCK INC and Aurora Mobile

Allowing for the 90-day total investment horizon BLOCK INC is expected to under-perform the Aurora Mobile. But the stock apears to be less risky and, when comparing its historical volatility, BLOCK INC is 1.59 times less risky than Aurora Mobile. The stock trades about -0.04 of its potential returns per unit of risk. The Aurora Mobile is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  616.00  in Aurora Mobile on October 23, 2024 and sell it today you would earn a total of  19.00  from holding Aurora Mobile or generate 3.08% return on investment over 90 days.

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

BLOCK INC  vs.  Aurora Mobile

BLOCK INC

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BLOCK INC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, BLOCK INC reported solid returns over the last few months and may actually be approaching a breakup point.

Aurora Mobile

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Mobile are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Aurora Mobile may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BLOCK INC and Aurora Mobile

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

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.