Correlation Between Nice and Aurora Mobile

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Can any of the company-specific risk be diversified away by investing in both Nice 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 Nice and Aurora Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nice Ltd ADR and Aurora Mobile, you can compare the effects of market volatilities on Nice 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 Nice with a short position of Aurora Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nice and Aurora Mobile.

Diversification Opportunities for Nice and Aurora Mobile

-0.44
  Correlation Coefficient

Very good diversification

The 3 months correlation between Nice and Aurora is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Nice Ltd ADR and Aurora Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Mobile and Nice 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 Nice Ltd ADR 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 Nice i.e., Nice and Aurora Mobile go up and down completely randomly.

Pair Corralation between Nice and Aurora Mobile

Given the investment horizon of 90 days Nice Ltd ADR is expected to generate 0.26 times more return on investment than Aurora Mobile. However, Nice Ltd ADR is 3.92 times less risky than Aurora Mobile. It trades about -0.21 of its potential returns per unit of risk. Aurora Mobile is currently generating about -0.11 per unit of risk. If you would invest  24,846  in Nice Ltd ADR on January 20, 2024 and sell it today you would lose (1,751) from holding Nice Ltd ADR or give up 7.05% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Nice Ltd ADR  vs.  Aurora Mobile

 Performance 
       Timeline  
Nice Ltd ADR 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Nice Ltd ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Nice may actually be approaching a critical reversion point that can send shares even higher in May 2024.
Aurora Mobile 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.

Nice and Aurora Mobile Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nice and Aurora Mobile

The main advantage of trading using opposite Nice and Aurora Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nice 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 Nice Ltd ADR 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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