Correlation Between SoundHound and ANZ Group

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

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

Diversification Opportunities for SoundHound and ANZ Group

-0.1

Correlation Coefficient

SoundHound  ANZ Group

Good diversification

The 3 months correlation between SoundHound and ANZ is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding SoundHound AI and ANZ Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANZ Group Holdings and SoundHound 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 SoundHound AI are associated (or correlated) with ANZ Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANZ Group Holdings has no effect on the direction of SoundHound i.e., SoundHound and ANZ Group go up and down completely randomly.

Pair Corralation between SoundHound and ANZ Group

Given the investment horizon of 90 days SoundHound AI is expected to generate 7.2 times more return on investment than ANZ Group. However, SoundHound is 7.2 times more volatile than ANZ Group Holdings. It trades about 0.26 of its potential returns per unit of risk. ANZ Group Holdings is currently generating about -0.07 per unit of risk. If you would invest  487.00  in SoundHound AI on September 12, 2024 and sell it today you would earn a total of  935.50  from holding SoundHound AI or generate 192.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

SoundHound AI  vs.  ANZ Group Holdings

SoundHound AI

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SoundHound AI are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, SoundHound displayed solid returns over the last few months and may actually be approaching a breakup point.

ANZ Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with SoundHound and ANZ Group

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

The idea behind SoundHound AI and ANZ Group 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.