Correlation Between Auddia and PLAIDInc

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

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

Diversification Opportunities for Auddia and PLAIDInc

-0.14

Correlation Coefficient

Auddia  PLAIDInc

Good diversification

The 3 months correlation between Auddia and PLAIDInc is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Auddia Inc and PLAIDInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAIDInc and Auddia 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 Auddia Inc are associated (or correlated) with PLAIDInc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAIDInc has no effect on the direction of Auddia i.e., Auddia and PLAIDInc go up and down completely randomly.

Pair Corralation between Auddia and PLAIDInc

Assuming the 90 days horizon Auddia Inc is expected to generate 2.91 times more return on investment than PLAIDInc. However, Auddia is 2.91 times more volatile than PLAIDInc. It trades about 0.14 of its potential returns per unit of risk. PLAIDInc is currently generating about 0.22 per unit of risk. If you would invest  2.24  in Auddia Inc on October 6, 2024 and sell it today you would earn a total of  0.43  from holding Auddia Inc or generate 19.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	76.19%
Values	Daily Returns

Auddia Inc  vs.  PLAIDInc

Auddia Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Auddia Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly uncertain fundamental indicators, Auddia may actually be approaching a critical reversion point that can send shares even higher in February 2025.

PLAIDInc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PLAIDInc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating forward indicators, PLAIDInc reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Auddia and PLAIDInc

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

The idea behind Auddia Inc and PLAIDInc 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.