Correlation Between Telos Corp and Aurora Mobile

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

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

Diversification Opportunities for Telos Corp and Aurora Mobile

0.05

Correlation Coefficient

Telos Corp  Aurora Mobile

Significant diversification

The 3 months correlation between Telos and Aurora is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Telos Corp and Aurora Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Mobile and Telos Corp 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 Telos Corp 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 Telos Corp i.e., Telos Corp and Aurora Mobile go up and down completely randomly.

Pair Corralation between Telos Corp and Aurora Mobile

Considering the 90-day investment horizon Telos Corp is expected to under-perform the Aurora Mobile. But the stock apears to be less risky and, when comparing its historical volatility, Telos Corp is 2.67 times less risky than Aurora Mobile. The stock trades about -0.01 of its potential returns per unit of risk. The Aurora Mobile is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  400.00  in Aurora Mobile on August 30, 2024 and sell it today you would earn a total of  419.00  from holding Aurora Mobile or generate 104.75% return on investment over 90 days.

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

Telos Corp  vs.  Aurora Mobile

Telos Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Aurora Mobile

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Mobile are ranked lower than 12 (%) 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 Telos Corp and Aurora Mobile

The main advantage of trading using opposite Telos Corp and Aurora Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telos Corp 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 Telos Corp 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.