Correlation Between AEye and Infrared Cameras

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

By analyzing existing cross correlation between AEye Inc and Infrared Cameras Holdings, you can compare the effects of market volatilities on AEye and Infrared Cameras 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 Infrared Cameras. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEye and Infrared Cameras.

Diversification Opportunities for AEye and Infrared Cameras

0.05

Correlation Coefficient

AEye  Infrared Cameras

Significant diversification

The 3 months correlation between AEye and Infrared is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding AEye Inc and Infrared Cameras Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infrared Cameras 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 Infrared Cameras. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infrared Cameras Holdings has no effect on the direction of AEye i.e., AEye and Infrared Cameras go up and down completely randomly.

Pair Corralation between AEye and Infrared Cameras

Assuming the 90 days horizon AEye Inc is expected to generate 6.08 times more return on investment than Infrared Cameras. However, AEye is 6.08 times more volatile than Infrared Cameras Holdings. It trades about 0.14 of its potential returns per unit of risk. Infrared Cameras Holdings is currently generating about 0.02 per unit of risk. If you would invest  5.98  in AEye Inc on May 5, 2025 and sell it today you would earn a total of  14.02  from holding AEye Inc or generate 234.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

AEye Inc  vs.  Infrared Cameras Holdings

AEye Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AEye Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, AEye showed solid returns over the last few months and may actually be approaching a breakup point.

Infrared Cameras Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Infrared Cameras Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Infrared Cameras is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with AEye and Infrared Cameras

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

The idea behind AEye Inc and Infrared Cameras Holdings 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.