Correlation Between Duos Technologies and SoundHound

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

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

Diversification Opportunities for Duos Technologies and SoundHound

0.67

Correlation Coefficient

Duos Technologies  SoundHound

Poor diversification

The 3 months correlation between Duos and SoundHound is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Duos Technologies Group and SoundHound AI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoundHound AI and Duos Technologies 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 Duos Technologies Group 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 Duos Technologies i.e., Duos Technologies and SoundHound go up and down completely randomly.

Pair Corralation between Duos Technologies and SoundHound

Given the investment horizon of 90 days Duos Technologies Group is expected to generate 0.98 times more return on investment than SoundHound. However, Duos Technologies Group is 1.02 times less risky than SoundHound. It trades about 0.23 of its potential returns per unit of risk. SoundHound AI is currently generating about 0.2 per unit of risk. If you would invest  235.00  in Duos Technologies Group on September 5, 2024 and sell it today you would earn a total of  269.00  from holding Duos Technologies Group or generate 114.47% return on investment over 90 days.

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

Duos Technologies Group  vs.  SoundHound AI

Duos Technologies

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Duos Technologies Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Duos Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

SoundHound AI

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SoundHound AI are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, SoundHound showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Duos Technologies and SoundHound

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

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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.