Correlation Between Telos Corp and Aurora Mobile

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

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

Diversification Opportunities for Telos Corp and Aurora Mobile

0.34

Correlation Coefficient

Telos Corp  Aurora Mobile

Weak diversification

The 3 months correlation between Telos and Aurora is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Telos Corp and Aurora Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Mobile and Telos 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 Telos 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 Telos Corp i.e., Telos Corp and Aurora Mobile go up and down completely randomly.

Pair Corralation between Telos Corp and Aurora Mobile

Considering the 90-day investment horizon Telos Corp is expected to generate 2.75 times less return on investment than Aurora Mobile. In addition to that, Telos Corp is 1.02 times more volatile than Aurora Mobile. It trades about 0.03 of its total potential returns per unit of risk. Aurora Mobile is currently generating about 0.09 per unit of volatility. If you would invest  224.00  in Aurora Mobile on August 16, 2024 and sell it today you would earn a total of  348.00  from holding Aurora Mobile or generate 155.36% return on investment over 90 days.

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

Telos Corp  vs.  Aurora Mobile

Telos Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Telos Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal essential indicators, Telos Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Aurora Mobile

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Mobile are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal 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 Telos Corp and Aurora Mobile

The main advantage of trading using opposite Telos Corp and Aurora Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telos Corp 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 Telos 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.