Correlation Between AEye and Nexters Warrant

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

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

Diversification Opportunities for AEye and Nexters Warrant

0.46

Correlation Coefficient

AEye  Nexters Warrant

Very weak diversification

The 3 months correlation between AEye and Nexters is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding AEye Inc and Nexters Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexters Warrant 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 Nexters Warrant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexters Warrant has no effect on the direction of AEye i.e., AEye and Nexters Warrant go up and down completely randomly.

Pair Corralation between AEye and Nexters Warrant

Assuming the 90 days horizon AEye Inc is expected to generate 0.79 times more return on investment than Nexters Warrant. However, AEye Inc is 1.26 times less risky than Nexters Warrant. It trades about 0.05 of its potential returns per unit of risk. Nexters Warrant is currently generating about -0.1 per unit of risk. If you would invest  8.05  in AEye Inc on December 29, 2024 and sell it today you would lose (1.93) from holding AEye Inc or give up 23.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	26.67%
Values	Daily Returns

AEye Inc  vs.  Nexters Warrant

AEye Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AEye Inc are ranked lower than 3 (%) 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.

Nexters Warrant

Risk-Adjusted Performance

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 fragile performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with AEye and Nexters Warrant

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

The idea behind AEye Inc and Nexters Warrant 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.