Correlation Between Koppers Holdings and Aeye

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

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

Diversification Opportunities for Koppers Holdings and Aeye

0.05

Correlation Coefficient

Koppers Holdings  Aeye

Significant diversification

The 3 months correlation between Koppers and Aeye is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Koppers Holdings and Aeye Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeye Inc and Koppers Holdings 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 Koppers Holdings 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 Koppers Holdings i.e., Koppers Holdings and Aeye go up and down completely randomly.

Pair Corralation between Koppers Holdings and Aeye

Considering the 90-day investment horizon Koppers Holdings is expected to generate 0.21 times more return on investment than Aeye. However, Koppers Holdings is 4.86 times less risky than Aeye. It trades about 0.01 of its potential returns per unit of risk. Aeye Inc is currently generating about -0.02 per unit of risk. If you would invest  3,707  in Koppers Holdings on July 2, 2024 and sell it today you would lose (6.00) from holding Koppers Holdings or give up 0.16% of portfolio value over 90 days.

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

Koppers Holdings  vs.  Aeye Inc

Koppers Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Koppers Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Koppers Holdings is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail 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 abnormal performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in October 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Koppers Holdings and Aeye

The main advantage of trading using opposite Koppers Holdings and Aeye positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koppers Holdings 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 Koppers Holdings 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.