Correlation Between Nexters Warrant and AEye

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

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

Diversification Opportunities for Nexters Warrant and AEye

-0.13

Correlation Coefficient

Nexters Warrant  AEye

Good diversification

The 3 months correlation between Nexters and AEye is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Nexters Warrant and AEye Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEye Inc and Nexters Warrant 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 Nexters Warrant are associated (or correlated) with AEye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEye Inc has no effect on the direction of Nexters Warrant i.e., Nexters Warrant and AEye go up and down completely randomly.

Pair Corralation between Nexters Warrant and AEye

Assuming the 90 days horizon Nexters Warrant is expected to generate 3.74 times more return on investment than AEye. However, Nexters Warrant is 3.74 times more volatile than AEye Inc. It trades about 0.11 of its potential returns per unit of risk. AEye Inc is currently generating about 0.13 per unit of risk. If you would invest  71.00  in Nexters Warrant on October 9, 2024 and sell it today you would lose (69.20) from holding Nexters Warrant or give up 97.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	53.63%
Values	Daily Returns

Nexters Warrant  vs.  AEye Inc

Nexters Warrant

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nexters Warrant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

AEye Inc

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AEye Inc are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, AEye showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nexters Warrant and AEye

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

The idea behind Nexters Warrant and AEye 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.