Correlation Between AEye and Microvast Holdings
Can any of the company-specific risk be diversified away by investing in both AEye and Microvast Holdings 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 Microvast Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AEye Inc and Microvast Holdings, you can compare the effects of market volatilities on AEye and Microvast Holdings 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 Microvast Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEye and Microvast Holdings.
Diversification Opportunities for AEye and Microvast Holdings
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AEye and Microvast is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding AEye Inc and Microvast Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microvast Holdings 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 Microvast Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microvast Holdings has no effect on the direction of AEye i.e., AEye and Microvast Holdings go up and down completely randomly.
Pair Corralation between AEye and Microvast Holdings
Assuming the 90 days horizon AEye Inc is expected to generate 1.61 times more return on investment than Microvast Holdings. However, AEye is 1.61 times more volatile than Microvast Holdings. It trades about 0.09 of its potential returns per unit of risk. Microvast Holdings is currently generating about -0.12 per unit of risk. If you would invest 8.20 in AEye Inc on November 3, 2024 and sell it today you would lose (0.50) from holding AEye Inc or give up 6.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AEye Inc vs. Microvast Holdings
Performance |
| Timeline |
| AEye Inc |
| Microvast Holdings |
AEye and Microvast Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AEye and Microvast Holdings
The main advantage of trading using opposite AEye and Microvast Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AEye position performs unexpectedly, Microvast Holdings 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 Microvast Holdings will offset losses from the drop in Microvast Holdings' long position.| AEye vs. Faraday Future Intelligent | AEye vs. Innoviz Technologies | AEye vs. Aeye Inc | AEye vs. Xos Equity Warrants |
| Microvast Holdings vs. Microvast Holdings | Microvast Holdings vs. EVgo Equity Warrants | Microvast Holdings vs. Paysafe Ltd Wt | Microvast Holdings vs. Faraday Future Intelligent |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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