Correlation Between Nextnav Acquisition and Aurora Mobile

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

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

Diversification Opportunities for Nextnav Acquisition and Aurora Mobile

0.1

Correlation Coefficient

Nextnav Acquisition  Aurora Mobile

Average diversification

The 3 months correlation between Nextnav and Aurora is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Nextnav Acquisition Corp and Aurora Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Mobile and Nextnav Acquisition 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 Nextnav Acquisition Corp 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 Nextnav Acquisition i.e., Nextnav Acquisition and Aurora Mobile go up and down completely randomly.

Pair Corralation between Nextnav Acquisition and Aurora Mobile

Allowing for the 90-day total investment horizon Nextnav Acquisition Corp is expected to generate 0.38 times more return on investment than Aurora Mobile. However, Nextnav Acquisition Corp is 2.6 times less risky than Aurora Mobile. It trades about 0.27 of its potential returns per unit of risk. Aurora Mobile is currently generating about 0.0 per unit of risk. If you would invest  1,018  in Nextnav Acquisition Corp on September 23, 2024 and sell it today you would earn a total of  542.00  from holding Nextnav Acquisition Corp or generate 53.24% return on investment over 90 days.

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

Nextnav Acquisition Corp  vs.  Aurora Mobile

Nextnav Acquisition Corp

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Nextnav Acquisition Corp are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Nextnav Acquisition displayed solid returns over the last few months and may actually be approaching a breakup point.

Aurora Mobile

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Mobile are ranked lower than 4 (%) 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.

Pair Trading with Nextnav Acquisition and Aurora Mobile

The main advantage of trading using opposite Nextnav Acquisition and Aurora Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextnav Acquisition 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 Nextnav Acquisition Corp 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.

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.