Correlation Between Aeye and TOTAL

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

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

Diversification Opportunities for Aeye and TOTAL

0.31

Correlation Coefficient

Aeye  TOTAL

Weak diversification

The 3 months correlation between Aeye and TOTAL is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Aeye Inc and TOTAL CAPITAL INTERNATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOTAL CAPITAL INTERN 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 TOTAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOTAL CAPITAL INTERN has no effect on the direction of Aeye i.e., Aeye and TOTAL go up and down completely randomly.

Pair Corralation between Aeye and TOTAL

Given the investment horizon of 90 days Aeye Inc is expected to under-perform the TOTAL. In addition to that, Aeye is 3.23 times more volatile than TOTAL CAPITAL INTERNATIONAL. It trades about -0.02 of its total potential returns per unit of risk. TOTAL CAPITAL INTERNATIONAL is currently generating about 0.05 per unit of volatility. If you would invest  7,073  in TOTAL CAPITAL INTERNATIONAL on August 31, 2024 and sell it today you would earn a total of  217.00  from holding TOTAL CAPITAL INTERNATIONAL or generate 3.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	79.37%
Values	Daily Returns

Aeye Inc  vs.  TOTAL CAPITAL INTERNATIONAL

Aeye Inc

Risk-Adjusted Performance

0 of 100

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.

TOTAL CAPITAL INTERN

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TOTAL CAPITAL INTERNATIONAL are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, TOTAL is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aeye and TOTAL

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

The idea behind Aeye Inc and TOTAL CAPITAL 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.