Correlation Between Applied Blockchain and SoundHound
Can any of the company-specific risk be diversified away by investing in both Applied Blockchain and SoundHound 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 Applied Blockchain and SoundHound into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Blockchain and SoundHound AI, you can compare the effects of market volatilities on Applied Blockchain and SoundHound 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 Applied Blockchain with a short position of SoundHound. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Blockchain and SoundHound.
Diversification Opportunities for Applied Blockchain and SoundHound
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Applied and SoundHound is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Applied Blockchain and SoundHound AI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoundHound AI and Applied Blockchain 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 Applied Blockchain are associated (or correlated) with SoundHound. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoundHound AI has no effect on the direction of Applied Blockchain i.e., Applied Blockchain and SoundHound go up and down completely randomly.
Pair Corralation between Applied Blockchain and SoundHound
Given the investment horizon of 90 days Applied Blockchain is expected to generate 2.39 times less return on investment than SoundHound. But when comparing it to its historical volatility, Applied Blockchain is 1.23 times less risky than SoundHound. It trades about 0.13 of its potential returns per unit of risk. SoundHound AI is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 485.00 in SoundHound AI on September 13, 2024 and sell it today you would earn a total of 870.00 from holding SoundHound AI or generate 179.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Applied Blockchain vs. SoundHound AI
Performance |
Timeline |
Applied Blockchain |
SoundHound AI |
Applied Blockchain and SoundHound Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Applied Blockchain and SoundHound
The main advantage of trading using opposite Applied Blockchain and SoundHound positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Blockchain position performs unexpectedly, SoundHound 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 SoundHound will offset losses from the drop in SoundHound's long position.Applied Blockchain vs. Magic Empire Global | Applied Blockchain vs. Zhong Yang Financial | Applied Blockchain vs. Netcapital | Applied Blockchain vs. Lazard |
SoundHound vs. Snowflake | SoundHound vs. Zoom Video Communications | SoundHound vs. Shopify | SoundHound vs. Workday |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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