Correlation Between Aurora Mobile and Toast

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

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

Diversification Opportunities for Aurora Mobile and Toast

0.66

Correlation Coefficient

Aurora Mobile  Toast

Poor diversification

The 3 months correlation between Aurora and Toast is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Mobile and Toast Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toast 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 Toast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toast Inc has no effect on the direction of Aurora Mobile i.e., Aurora Mobile and Toast go up and down completely randomly.

Pair Corralation between Aurora Mobile and Toast

Allowing for the 90-day total investment horizon Aurora Mobile is expected to generate 1.74 times less return on investment than Toast. In addition to that, Aurora Mobile is 1.61 times more volatile than Toast Inc. It trades about 0.08 of its total potential returns per unit of risk. Toast Inc is currently generating about 0.22 per unit of volatility. If you would invest  3,530  in Toast Inc on May 1, 2025 and sell it today you would earn a total of  1,331  from holding Toast Inc or generate 37.71% return on investment over 90 days.

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

Aurora Mobile  vs.  Toast Inc

Aurora Mobile

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Mobile are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Aurora Mobile reported solid returns over the last few months and may actually be approaching a breakup point.

Toast Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Toast Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Toast unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aurora Mobile and Toast

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

The idea behind Aurora Mobile and Toast 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.