Correlation Between SoundHound and Freight Technologies

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

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

Diversification Opportunities for SoundHound and Freight Technologies

0.26

Correlation Coefficient

SoundHound  Freight Technologies

Modest diversification

The 3 months correlation between SoundHound and Freight is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding SoundHound AI and Freight Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freight Technologies 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 Freight Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freight Technologies has no effect on the direction of SoundHound i.e., SoundHound and Freight Technologies go up and down completely randomly.

Pair Corralation between SoundHound and Freight Technologies

Given the investment horizon of 90 days SoundHound AI is expected to under-perform the Freight Technologies. But the stock apears to be less risky and, when comparing its historical volatility, SoundHound AI is 1.01 times less risky than Freight Technologies. The stock trades about -0.23 of its potential returns per unit of risk. The Freight Technologies is currently generating about -0.22 of returns per unit of risk over similar time horizon. If you would invest  203.00  in Freight Technologies on October 22, 2024 and sell it today you would lose (67.00) from holding Freight Technologies or give up 33.0% of portfolio value over 90 days.

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

SoundHound AI  vs.  Freight Technologies

SoundHound AI

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SoundHound AI are ranked lower than 15 (%) 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.

Freight Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freight Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with SoundHound and Freight Technologies

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

The idea behind SoundHound AI and Freight Technologies 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.