Correlation Between AEye and GDEV

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Can any of the company-specific risk be diversified away by investing in both AEye and GDEV 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 GDEV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AEye Inc and GDEV Inc, you can compare the effects of market volatilities on AEye and GDEV 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 GDEV. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEye and GDEV.

Diversification Opportunities for AEye and GDEV

AEyeGDEVDiversified AwayAEyeGDEVDiversified Away100%
-0.59
  Correlation Coefficient

Excellent diversification

The 3 months correlation between AEye and GDEV is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding AEye Inc and GDEV Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GDEV Inc 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 GDEV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GDEV Inc has no effect on the direction of AEye i.e., AEye and GDEV go up and down completely randomly.

Pair Corralation between AEye and GDEV

Assuming the 90 days horizon AEye Inc is expected to generate 2.9 times more return on investment than GDEV. However, AEye is 2.9 times more volatile than GDEV Inc. It trades about 0.11 of its potential returns per unit of risk. GDEV Inc is currently generating about -0.01 per unit of risk. If you would invest  0.90  in AEye Inc on September 15, 2024 and sell it today you would earn a total of  0.40  from holding AEye Inc or generate 44.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

AEye Inc  vs.  GDEV Inc

 Performance 
JavaScript chart by amCharts 3.21.15OctNov -40-20020406080
JavaScript chart by amCharts 3.21.15LIDRW GDEV
       Timeline  
AEye Inc 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in AEye Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, AEye showed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec0.0060.0080.010.0120.0140.0160.018
GDEV Inc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days GDEV Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, GDEV is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec25303540

AEye and GDEV Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-60.6-45.39-30.18-14.96-0.115.5631.6647.7663.8679.96 0.0010.0020.0030.0040.0050.0060.0070.008
JavaScript chart by amCharts 3.21.15LIDRW GDEV
       Returns  

Pair Trading with AEye and GDEV

The main advantage of trading using opposite AEye and GDEV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AEye position performs unexpectedly, GDEV 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 GDEV will offset losses from the drop in GDEV's long position.
The idea behind AEye Inc and GDEV 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.
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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