Correlation Between Zenvia and Aurora Mobile

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

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

Diversification Opportunities for Zenvia and Aurora Mobile

0.26

Correlation Coefficient

Zenvia  Aurora Mobile

Modest diversification

The 3 months correlation between Zenvia and Aurora is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Zenvia Inc and Aurora Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Mobile and Zenvia 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 Zenvia 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 Zenvia i.e., Zenvia and Aurora Mobile go up and down completely randomly.

Pair Corralation between Zenvia and Aurora Mobile

Given the investment horizon of 90 days Zenvia Inc is expected to generate 0.28 times more return on investment than Aurora Mobile. However, Zenvia Inc is 3.63 times less risky than Aurora Mobile. It trades about -0.15 of its potential returns per unit of risk. Aurora Mobile is currently generating about -0.06 per unit of risk. If you would invest  237.00  in Zenvia Inc on November 28, 2024 and sell it today you would lose (28.00) from holding Zenvia Inc or give up 11.81% of portfolio value over 90 days.

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

Zenvia Inc  vs.  Aurora Mobile

Zenvia Inc

Risk-Adjusted Performance

OK

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

Aurora Mobile

Risk-Adjusted Performance

Modest

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.

Pair Trading with Zenvia and Aurora Mobile

The main advantage of trading using opposite Zenvia and Aurora Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zenvia 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 Zenvia 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.