Correlation Between Aurora Mobile and Pagerduty

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

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

Diversification Opportunities for Aurora Mobile and Pagerduty

0.27

Correlation Coefficient

Aurora Mobile  Pagerduty

Modest diversification

The 3 months correlation between Aurora and Pagerduty is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Mobile and Pagerduty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pagerduty 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 Pagerduty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pagerduty has no effect on the direction of Aurora Mobile i.e., Aurora Mobile and Pagerduty go up and down completely randomly.

Pair Corralation between Aurora Mobile and Pagerduty

Allowing for the 90-day total investment horizon Aurora Mobile is expected to under-perform the Pagerduty. In addition to that, Aurora Mobile is 2.49 times more volatile than Pagerduty. It trades about -0.11 of its total potential returns per unit of risk. Pagerduty is currently generating about -0.13 per unit of volatility. If you would invest  2,247  in Pagerduty on January 20, 2024 and sell it today you would lose (164.00) from holding Pagerduty or give up 7.3% of portfolio value over 90 days.

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

Aurora Mobile  vs.  Pagerduty

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 nearly stable technical and fundamental indicators, Aurora Mobile is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pagerduty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pagerduty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Aurora Mobile and Pagerduty

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

The idea behind Aurora Mobile and Pagerduty 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.