Correlation Between Aeye and 4 Less

Can any of the company-specific risk be diversified away by investing in both Aeye and 4 Less 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 Aeye and 4 Less into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aeye Inc and 4 Less Group, you can compare the effects of market volatilities on Aeye and 4 Less 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 Aeye with a short position of 4 Less. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeye and 4 Less.

Diversification Opportunities for Aeye and 4 Less

0.03

Correlation Coefficient

Aeye  4 Less

Significant diversification

The 3 months correlation between Aeye and FLES is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Aeye Inc and 4 Less Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 4 Less Group and Aeye 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 Aeye Inc are associated (or correlated) with 4 Less. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 4 Less Group has no effect on the direction of Aeye i.e., Aeye and 4 Less go up and down completely randomly.

Pair Corralation between Aeye and 4 Less

Given the investment horizon of 90 days Aeye Inc is expected to generate 0.63 times more return on investment than 4 Less. However, Aeye Inc is 1.58 times less risky than 4 Less. It trades about 0.17 of its potential returns per unit of risk. 4 Less Group is currently generating about 0.1 per unit of risk. If you would invest  115.00  in Aeye Inc on October 10, 2024 and sell it today you would earn a total of  103.00  from holding Aeye Inc or generate 89.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Aeye Inc  vs.  4 Less Group

Aeye Inc

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aeye Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Aeye reported solid returns over the last few months and may actually be approaching a breakup point.

4 Less Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in 4 Less Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical and fundamental indicators, 4 Less unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aeye and 4 Less

The main advantage of trading using opposite Aeye and 4 Less positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeye position performs unexpectedly, 4 Less 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 4 Less will offset losses from the drop in 4 Less' long position.

The idea behind Aeye Inc and 4 Less Group 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.