Correlation Between SoundHound and Converge Technology

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

By analyzing existing cross correlation between SoundHound AI and Converge Technology Solutions, you can compare the effects of market volatilities on SoundHound and Converge Technology 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 Converge Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoundHound and Converge Technology.

Diversification Opportunities for SoundHound and Converge Technology

-0.5

Correlation Coefficient

SoundHound  Converge Technology

Very good diversification

The 3 months correlation between SoundHound and Converge is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding SoundHound AI and Converge Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Converge Technology 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 Converge Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Converge Technology has no effect on the direction of SoundHound i.e., SoundHound and Converge Technology go up and down completely randomly.

Pair Corralation between SoundHound and Converge Technology

Given the investment horizon of 90 days SoundHound AI is expected to generate 6.18 times more return on investment than Converge Technology. However, SoundHound is 6.18 times more volatile than Converge Technology Solutions. It trades about 0.35 of its potential returns per unit of risk. Converge Technology Solutions is currently generating about -0.05 per unit of risk. If you would invest  1,015  in SoundHound AI on October 5, 2024 and sell it today you would earn a total of  1,001  from holding SoundHound AI or generate 98.62% return on investment over 90 days.

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

SoundHound AI  vs.  Converge Technology Solutions

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.

Converge Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Converge Technology Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with SoundHound and Converge Technology

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

The idea behind SoundHound AI and Converge Technology Solutions 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.