Correlation Between Applovin Corp and Uber Technologies

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

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

Diversification Opportunities for Applovin Corp and Uber Technologies

0.08

Correlation Coefficient

Applovin Corp  Uber Technologies

Significant diversification

The 3 months correlation between Applovin and Uber is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Applovin Corp and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies and Applovin Corp 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 Applovin Corp are associated (or correlated) with Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of Applovin Corp i.e., Applovin Corp and Uber Technologies go up and down completely randomly.

Pair Corralation between Applovin Corp and Uber Technologies

Considering the 90-day investment horizon Applovin Corp is expected to generate 4.18 times more return on investment than Uber Technologies. However, Applovin Corp is 4.18 times more volatile than Uber Technologies. It trades about 0.33 of its potential returns per unit of risk. Uber Technologies is currently generating about -0.26 per unit of risk. If you would invest  15,885  in Applovin Corp on August 20, 2024 and sell it today you would earn a total of  13,915  from holding Applovin Corp or generate 87.6% return on investment over 90 days.

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

Applovin Corp  vs.  Uber Technologies

Applovin Corp

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Applovin Corp are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Applovin Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Uber Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Uber Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Uber Technologies is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Applovin Corp and Uber Technologies

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

The idea behind Applovin Corp and Uber Technologies 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.