Correlation Between Sonic Foundry and Friendable

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

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

Diversification Opportunities for Sonic Foundry and Friendable

-0.02

Correlation Coefficient

Sonic Foundry  Friendable

Good diversification

The 3 months correlation between Sonic and Friendable is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Sonic Foundry and Friendable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Friendable and Sonic Foundry 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 Sonic Foundry are associated (or correlated) with Friendable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Friendable has no effect on the direction of Sonic Foundry i.e., Sonic Foundry and Friendable go up and down completely randomly.

Pair Corralation between Sonic Foundry and Friendable

Given the investment horizon of 90 days Sonic Foundry is expected to generate 28.77 times less return on investment than Friendable. But when comparing it to its historical volatility, Sonic Foundry is 9.88 times less risky than Friendable. It trades about 0.02 of its potential returns per unit of risk. Friendable is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Friendable on September 14, 2024 and sell it today you would earn a total of  0.00  from holding Friendable or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	29.21%
Values	Daily Returns

Sonic Foundry  vs.  Friendable

Sonic Foundry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sonic Foundry has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Sonic Foundry is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Friendable

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Friendable are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental drivers, Friendable disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sonic Foundry and Friendable

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

The idea behind Sonic Foundry and Friendable 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.