Correlation Between ADEIA P and AudioEye

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

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

Diversification Opportunities for ADEIA P and AudioEye

-0.44

Correlation Coefficient

ADEIA P  AudioEye

Very good diversification

The 3 months correlation between ADEIA and AudioEye is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding ADEIA P and AudioEye in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AudioEye and ADEIA P 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 ADEIA P are associated (or correlated) with AudioEye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AudioEye has no effect on the direction of ADEIA P i.e., ADEIA P and AudioEye go up and down completely randomly.

Pair Corralation between ADEIA P and AudioEye

Given the investment horizon of 90 days ADEIA P is expected to generate 0.73 times more return on investment than AudioEye. However, ADEIA P is 1.37 times less risky than AudioEye. It trades about 0.0 of its potential returns per unit of risk. AudioEye is currently generating about -0.09 per unit of risk. If you would invest  1,380  in ADEIA P on December 30, 2024 and sell it today you would lose (55.00) from holding ADEIA P or give up 3.99% of portfolio value over 90 days.

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

ADEIA P  vs.  AudioEye

ADEIA P

Risk-Adjusted Performance

Very Weak

Over the last 90 days ADEIA P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, ADEIA P is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

AudioEye

Risk-Adjusted Performance

Very Weak

Over the last 90 days AudioEye has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with ADEIA P and AudioEye

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

The idea behind ADEIA P and AudioEye 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.