Correlation Between Exela Technologies and AudioEye

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

By analyzing existing cross correlation between Exela Technologies Preferred and AudioEye, you can compare the effects of market volatilities on Exela Technologies and AudioEye 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 Exela Technologies with a short position of AudioEye. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exela Technologies and AudioEye.

Diversification Opportunities for Exela Technologies and AudioEye

-0.44

Correlation Coefficient

Exela Technologies  AudioEye

Very good diversification

The 3 months correlation between Exela and AudioEye is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Exela Technologies Preferred and AudioEye in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AudioEye and Exela Technologies 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 Exela Technologies Preferred are associated (or correlated) with AudioEye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AudioEye has no effect on the direction of Exela Technologies i.e., Exela Technologies and AudioEye go up and down completely randomly.

Pair Corralation between Exela Technologies and AudioEye

Assuming the 90 days horizon Exela Technologies Preferred is expected to under-perform the AudioEye. In addition to that, Exela Technologies is 1.12 times more volatile than AudioEye. It trades about -0.17 of its total potential returns per unit of risk. AudioEye is currently generating about 0.09 per unit of volatility. If you would invest  2,155  in AudioEye on September 3, 2024 and sell it today you would earn a total of  537.00  from holding AudioEye or generate 24.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	81.25%
Values	Daily Returns

Exela Technologies Preferred  vs.  AudioEye

Exela Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exela Technologies Preferred has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Preferred Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

AudioEye

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AudioEye are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, AudioEye exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Exela Technologies and AudioEye

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

The idea behind Exela Technologies Preferred and AudioEye 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.