Correlation Between NetScout Systems and Aurora Mobile

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

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

Diversification Opportunities for NetScout Systems and Aurora Mobile

-0.13

Correlation Coefficient

NetScout Systems  Aurora Mobile

Good diversification

The 3 months correlation between NetScout and Aurora is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding NetScout Systems and Aurora Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Mobile and NetScout Systems 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 NetScout Systems 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 NetScout Systems i.e., NetScout Systems and Aurora Mobile go up and down completely randomly.

Pair Corralation between NetScout Systems and Aurora Mobile

Given the investment horizon of 90 days NetScout Systems is expected to generate 0.31 times more return on investment than Aurora Mobile. However, NetScout Systems is 3.25 times less risky than Aurora Mobile. It trades about -0.01 of its potential returns per unit of risk. Aurora Mobile is currently generating about -0.12 per unit of risk. If you would invest  2,211  in NetScout Systems on September 27, 2024 and sell it today you would lose (18.00) from holding NetScout Systems or give up 0.81% of portfolio value over 90 days.

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

NetScout Systems  vs.  Aurora Mobile

NetScout Systems

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NetScout Systems are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, NetScout Systems is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Aurora Mobile

Risk-Adjusted Performance

0 of 100

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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NetScout Systems and Aurora Mobile

The main advantage of trading using opposite NetScout Systems and Aurora Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NetScout Systems 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 NetScout Systems 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..