What does it mean when the alien symbol is red or yellow?

[Amycus]

I am talking about the "alien" symbols in the lower right corner that show up when you see an enemy. Until now I thought that a yellow symbol meant that I flanked them, but I am not so sure anymore after a bit of playing...

[di eshor ribly]

Red means they are visible, yellow means they are flanked, with the exception of flying enemies. Yellow can also mean they are not in cover.

[Incunabulum]

Yellow is when they have no cover bonus gainst that particular soldier - either they are out in the open of the soldier has gotten a position where the alien's cover is no longer between it and the soldier.