Correlation Between VHAI and AEye
Can any of the company-specific risk be diversified away by investing in both VHAI 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 VHAI and AEye into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VHAI and AEye Inc, you can compare the effects of market volatilities on VHAI 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 VHAI with a short position of AEye. Check out your portfolio center. Please also check ongoing floating volatility patterns of VHAI and AEye.
Diversification Opportunities for VHAI and AEye
Significant diversification
The 3 months correlation between VHAI and AEye is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding VHAI and AEye Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEye Inc and VHAI 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 VHAI 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 VHAI i.e., VHAI and AEye go up and down completely randomly.
Pair Corralation between VHAI and AEye
Given the investment horizon of 90 days VHAI is expected to under-perform the AEye. But the pink sheet apears to be less risky and, when comparing its historical volatility, VHAI is 2.3 times less risky than AEye. The pink sheet trades about -0.12 of its potential returns per unit of risk. The AEye Inc is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 0.90 in AEye Inc on September 1, 2024 and sell it today you would earn a total of 0.30 from holding AEye Inc or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VHAI vs. AEye Inc
Performance |
| Timeline |
| VHAI |
| AEye Inc |
VHAI and AEye Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VHAI and AEye
The main advantage of trading using opposite VHAI and AEye positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VHAI 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 VHAI 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.| AEye vs. Faraday Future Intelligent | AEye vs. Innoviz Technologies | AEye vs. Aeye Inc | AEye vs. Xos Equity Warrants |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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