Correlation Between SoundHound and ASML Holding
Can any of the company-specific risk be diversified away by investing in both SoundHound and ASML Holding 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 ASML Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SoundHound AI and ASML Holding NV, you can compare the effects of market volatilities on SoundHound and ASML Holding 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 ASML Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoundHound and ASML Holding.
Diversification Opportunities for SoundHound and ASML Holding
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SoundHound and ASML is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding SoundHound AI and ASML Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASML Holding NV 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 ASML Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASML Holding NV has no effect on the direction of SoundHound i.e., SoundHound and ASML Holding go up and down completely randomly.
Pair Corralation between SoundHound and ASML Holding
Given the investment horizon of 90 days SoundHound AI is expected to under-perform the ASML Holding. In addition to that, SoundHound is 3.15 times more volatile than ASML Holding NV. It trades about -0.17 of its total potential returns per unit of risk. ASML Holding NV is currently generating about 0.0 per unit of volatility. If you would invest 69,392 in ASML Holding NV on December 28, 2024 and sell it today you would lose (1,651) from holding ASML Holding NV or give up 2.38% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
SoundHound AI vs. ASML Holding NV
Performance |
Timeline |
SoundHound AI |
ASML Holding NV |
SoundHound and ASML Holding Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SoundHound and ASML Holding
The main advantage of trading using opposite SoundHound and ASML Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoundHound position performs unexpectedly, ASML Holding 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 ASML Holding will offset losses from the drop in ASML Holding's long position.SoundHound vs. Snowflake | SoundHound vs. Zoom Video Communications | SoundHound vs. Shopify | SoundHound vs. Workday |
ASML Holding vs. Sumco Corp ADR | ASML Holding vs. Disco Corp ADR | ASML Holding vs. SCREEN Holdings Co | ASML Holding vs. Tokyo Electron |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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