Correlation Between Aeye and Luminar Technologies

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

Diversification Opportunities for Aeye and Luminar Technologies

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Aeye and Luminar is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aeye Inc and Luminar Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luminar Technologies 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 Luminar Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luminar Technologies has no effect on the direction of Aeye i.e., Aeye and Luminar Technologies go up and down completely randomly.

Pair Corralation between Aeye and Luminar Technologies

Given the investment horizon of 90 days Aeye Inc is expected to under-perform the Luminar Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Aeye Inc is 1.33 times less risky than Luminar Technologies. The stock trades about -0.29 of its potential returns per unit of risk. The Luminar Technologies is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  672.00  in Luminar Technologies on November 18, 2024 and sell it today you would lose (27.00) from holding Luminar Technologies or give up 4.02% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Aeye Inc  vs.  Luminar Technologies

 Performance 
       Timeline  
Aeye Inc 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Aeye Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Aeye reported solid returns over the last few months and may actually be approaching a breakup point.
Luminar Technologies 

Risk-Adjusted Performance

Very Weak

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

Aeye and Luminar Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aeye and Luminar Technologies

The main advantage of trading using opposite Aeye and Luminar Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeye position performs unexpectedly, Luminar Technologies 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 Luminar Technologies will offset losses from the drop in Luminar Technologies' long position.
The idea behind Aeye Inc and Luminar Technologies 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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