Correlation Between Nice and Aurora Mobile
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 Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Nice Ltd ADR vs. Aurora Mobile
Performance |
Timeline |
Nice Ltd ADR |
Aurora Mobile |
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.Aurora Mobile vs. Evertec | Aurora Mobile vs. CSG Systems International | Aurora Mobile vs. Radware | Aurora Mobile vs. NetScout Systems |
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.
Other Complementary Tools
Equity Valuation Check real value of public entities based on technical and fundamental data | |
Fundamental Analysis View fundamental data based on most recent published financial statements | |
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
Content Syndication Quickly integrate customizable finance content to your own investment portal | |
Economic Indicators Top statistical indicators that provide insights into how an economy is performing |