Correlation Between ANZ Group and SoundHound

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

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

Diversification Opportunities for ANZ Group and SoundHound

-0.87

Correlation Coefficient

ANZ Group  SoundHound

Pay attention - limited upside

The 3 months correlation between ANZ and SoundHound is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding ANZ Group Holdings and SoundHound AI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoundHound AI and ANZ Group 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 ANZ Group Holdings 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 ANZ Group i.e., ANZ Group and SoundHound go up and down completely randomly.

Pair Corralation between ANZ Group and SoundHound

Assuming the 90 days horizon ANZ Group is expected to generate 17.34 times less return on investment than SoundHound. But when comparing it to its historical volatility, ANZ Group Holdings is 7.09 times less risky than SoundHound. It trades about 0.04 of its potential returns per unit of risk. SoundHound AI is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  100.00  in SoundHound AI on October 9, 2024 and sell it today you would earn a total of  1,889  from holding SoundHound AI or generate 1889.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

ANZ Group Holdings  vs.  SoundHound AI

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 latest uncertain performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

SoundHound AI

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SoundHound AI are ranked lower than 23 (%) 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.

Pair Trading with ANZ Group and SoundHound

The main advantage of trading using opposite ANZ Group and SoundHound positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ANZ Group 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.

The idea behind ANZ Group Holdings and SoundHound AI 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.