Correlation Between Aurora Mobile and Wex

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

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

Diversification Opportunities for Aurora Mobile and Wex

-0.28

Correlation Coefficient

Aurora Mobile  Wex

Very good diversification

The 3 months correlation between Aurora and Wex is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Mobile and Wex Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wex Inc 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 Wex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wex Inc has no effect on the direction of Aurora Mobile i.e., Aurora Mobile and Wex go up and down completely randomly.

Pair Corralation between Aurora Mobile and Wex

Allowing for the 90-day total investment horizon Aurora Mobile is expected to generate 3.34 times more return on investment than Wex. However, Aurora Mobile is 3.34 times more volatile than Wex Inc. It trades about 0.03 of its potential returns per unit of risk. Wex Inc is currently generating about -0.09 per unit of risk. If you would invest  302.00  in Aurora Mobile on February 5, 2024 and sell it today you would earn a total of  6.00  from holding Aurora Mobile or generate 1.99% return on investment over 90 days.

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

Aurora Mobile  vs.  Wex Inc

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 latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Wex Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wex Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, Wex may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Aurora Mobile and Wex

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

The idea behind Aurora Mobile and Wex Inc 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.