Correlation Between SoundHound and Gold Bull

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

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

Diversification Opportunities for SoundHound and Gold Bull

0.01

Correlation Coefficient

SoundHound  Gold Bull

Significant diversification

The 3 months correlation between SoundHound and Gold is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding SoundHound AI and Gold Bull Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Bull Resources 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 Gold Bull. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Bull Resources has no effect on the direction of SoundHound i.e., SoundHound and Gold Bull go up and down completely randomly.

Pair Corralation between SoundHound and Gold Bull

Given the investment horizon of 90 days SoundHound is expected to generate 2.08 times less return on investment than Gold Bull. But when comparing it to its historical volatility, SoundHound AI is 1.29 times less risky than Gold Bull. It trades about 0.07 of its potential returns per unit of risk. Gold Bull Resources is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  19.00  in Gold Bull Resources on December 3, 2024 and sell it today you would earn a total of  15.00  from holding Gold Bull Resources or generate 78.95% return on investment over 90 days.

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

SoundHound AI  vs.  Gold Bull Resources

SoundHound AI

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SoundHound AI are ranked lower than 5 (%) 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.

Gold Bull Resources

Risk-Adjusted Performance

OK

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

Pair Trading with SoundHound and Gold Bull

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

The idea behind SoundHound AI and Gold Bull Resources 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 Global Correlations module to find global opportunities by holding instruments from different markets.