Correlation Between Compagnie Generale and Aeye

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

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

Diversification Opportunities for Compagnie Generale and Aeye

0.37

Correlation Coefficient

Compagnie Generale  Aeye

Weak diversification

The 3 months correlation between Compagnie and Aeye is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Generale des and Aeye Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeye Inc and Compagnie Generale 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 Compagnie Generale des 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 Compagnie Generale i.e., Compagnie Generale and Aeye go up and down completely randomly.

Pair Corralation between Compagnie Generale and Aeye

Assuming the 90 days horizon Compagnie Generale des is expected to under-perform the Aeye. But the pink sheet apears to be less risky and, when comparing its historical volatility, Compagnie Generale des is 3.05 times less risky than Aeye. The pink sheet trades about -0.19 of its potential returns per unit of risk. The Aeye Inc is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  119.00  in Aeye Inc on September 3, 2024 and sell it today you would lose (6.00) from holding Aeye Inc or give up 5.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Compagnie Generale des  vs.  Aeye Inc

Compagnie Generale des

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compagnie Generale des has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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.

Pair Trading with Compagnie Generale and Aeye

The main advantage of trading using opposite Compagnie Generale and Aeye positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Generale 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 Compagnie Generale des 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.