Correlation Between AEye and GreenLight Biosciences

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

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

Diversification Opportunities for AEye and GreenLight Biosciences

-0.24

Correlation Coefficient

AEye  GreenLight Biosciences

Very good diversification

The 3 months correlation between AEye and GreenLight is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding AEye Inc and GreenLight Biosciences Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenLight Biosciences 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 GreenLight Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenLight Biosciences has no effect on the direction of AEye i.e., AEye and GreenLight Biosciences go up and down completely randomly.

Pair Corralation between AEye and GreenLight Biosciences

Assuming the 90 days horizon AEye Inc is expected to generate 1.77 times more return on investment than GreenLight Biosciences. However, AEye is 1.77 times more volatile than GreenLight Biosciences Holdings. It trades about 0.11 of its potential returns per unit of risk. GreenLight Biosciences Holdings is currently generating about 0.05 per unit of risk. If you would invest  2.86  in AEye Inc on August 31, 2024 and sell it today you would lose (1.76) from holding AEye Inc or give up 61.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	12.44%
Values	Daily Returns

AEye Inc  vs.  GreenLight Biosciences Holding

AEye Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AEye Inc are ranked lower than 7 (%) 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.

GreenLight Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GreenLight Biosciences Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, GreenLight Biosciences is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with AEye and GreenLight Biosciences

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

The idea behind AEye Inc and GreenLight Biosciences Holdings 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.