Correlation Between Lilium Equity and AEye

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

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

Diversification Opportunities for Lilium Equity and AEye

-0.77

Correlation Coefficient

Lilium Equity  AEye

Pay attention - limited upside

The 3 months correlation between Lilium and AEye is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Lilium Equity Warrants and AEye Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEye Inc and Lilium Equity 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 Lilium Equity Warrants are associated (or correlated) with AEye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEye Inc has no effect on the direction of Lilium Equity i.e., Lilium Equity and AEye go up and down completely randomly.

Pair Corralation between Lilium Equity and AEye

Assuming the 90 days horizon Lilium Equity Warrants is expected to under-perform the AEye. But the pink sheet apears to be less risky and, when comparing its historical volatility, Lilium Equity Warrants is 1.02 times less risky than AEye. The pink sheet trades about -0.25 of its potential returns per unit of risk. The AEye Inc is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  0.60  in AEye Inc on October 8, 2024 and sell it today you would earn a total of  12.40  from holding AEye Inc or generate 2066.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	37.1%
Values	Daily Returns

Lilium Equity Warrants  vs.  AEye Inc

Lilium Equity Warrants

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lilium Equity Warrants has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

AEye Inc

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AEye Inc are ranked lower than 23 (%) 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.

Pair Trading with Lilium Equity and AEye

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

The idea behind Lilium Equity Warrants and AEye Inc 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.

Check out your portfolio center.

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.