Correlation Between SoundHound and Green Impact

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

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

Diversification Opportunities for SoundHound and Green Impact

-0.36

Correlation Coefficient

SoundHound  Green Impact

Very good diversification

The 3 months correlation between SoundHound and Green is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding SoundHound AI and Green Impact Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Impact Partners 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 Green Impact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Impact Partners has no effect on the direction of SoundHound i.e., SoundHound and Green Impact go up and down completely randomly.

Pair Corralation between SoundHound and Green Impact

Given the investment horizon of 90 days SoundHound AI is expected to generate 2.3 times more return on investment than Green Impact. However, SoundHound is 2.3 times more volatile than Green Impact Partners. It trades about 0.1 of its potential returns per unit of risk. Green Impact Partners is currently generating about -0.01 per unit of risk. If you would invest  135.00  in SoundHound AI on October 7, 2024 and sell it today you would earn a total of  1,927  from holding SoundHound AI or generate 1427.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

SoundHound AI  vs.  Green Impact Partners

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.

Green Impact Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Green Impact Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Green Impact is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SoundHound and Green Impact

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

The idea behind SoundHound AI and Green Impact Partners 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.