Correlation Between Aurora Mobile and Oracle

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

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

Diversification Opportunities for Aurora Mobile and Oracle

-0.04

Correlation Coefficient

Aurora Mobile  Oracle

Good diversification

The 3 months correlation between Aurora and Oracle is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Mobile and Oracle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oracle 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 Oracle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oracle has no effect on the direction of Aurora Mobile i.e., Aurora Mobile and Oracle go up and down completely randomly.

Pair Corralation between Aurora Mobile and Oracle

Allowing for the 90-day total investment horizon Aurora Mobile is expected to generate 5.68 times more return on investment than Oracle. However, Aurora Mobile is 5.68 times more volatile than Oracle. It trades about 0.07 of its potential returns per unit of risk. Oracle is currently generating about 0.03 per unit of risk. If you would invest  529.00  in Aurora Mobile on September 22, 2024 and sell it today you would earn a total of  76.00  from holding Aurora Mobile or generate 14.37% 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.  Oracle

Aurora Mobile

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Mobile are ranked lower than 5 (%) 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.

Oracle

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oracle are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Oracle is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Aurora Mobile and Oracle

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

The idea behind Aurora Mobile and Oracle 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.