Correlation Between Aeye and Superior Industries

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

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

Diversification Opportunities for Aeye and Superior Industries

0.06

Correlation Coefficient

Aeye  Superior Industries

Significant diversification

The 3 months correlation between Aeye and Superior is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Aeye Inc and Superior Industries Internatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Industries 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 Superior Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Industries has no effect on the direction of Aeye i.e., Aeye and Superior Industries go up and down completely randomly.

Pair Corralation between Aeye and Superior Industries

Given the investment horizon of 90 days Aeye Inc is expected to generate 3.98 times more return on investment than Superior Industries. However, Aeye is 3.98 times more volatile than Superior Industries International. It trades about 0.0 of its potential returns per unit of risk. Superior Industries International is currently generating about -0.11 per unit of risk. If you would invest  113.00  in Aeye Inc on November 29, 2024 and sell it today you would lose (47.00) from holding Aeye Inc or give up 41.59% of portfolio value over 90 days.

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

Aeye Inc  vs.  Superior Industries Internatio

Aeye Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aeye Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Aeye is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Superior Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Superior Industries International has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Aeye and Superior Industries

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

The idea behind Aeye Inc and Superior Industries International 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..