Correlation Between SoundHound and GSK Plc
Can any of the company-specific risk be diversified away by investing in both SoundHound and GSK Plc 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 GSK Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SoundHound AI and GSK plc, you can compare the effects of market volatilities on SoundHound and GSK Plc 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 GSK Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoundHound and GSK Plc.
Diversification Opportunities for SoundHound and GSK Plc
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SoundHound and GSK is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding SoundHound AI and GSK plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSK plc 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 GSK Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSK plc has no effect on the direction of SoundHound i.e., SoundHound and GSK Plc go up and down completely randomly.
Pair Corralation between SoundHound and GSK Plc
Given the investment horizon of 90 days SoundHound AI is expected to under-perform the GSK Plc. In addition to that, SoundHound is 3.35 times more volatile than GSK plc. It trades about -0.01 of its total potential returns per unit of risk. GSK plc is currently generating about 0.08 per unit of volatility. If you would invest 1,698 in GSK plc on December 5, 2024 and sell it today you would earn a total of 186.00 from holding GSK plc or generate 10.95% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
SoundHound AI vs. GSK plc
Performance |
Timeline |
SoundHound AI |
GSK plc |
SoundHound and GSK Plc Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SoundHound and GSK Plc
The main advantage of trading using opposite SoundHound and GSK Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoundHound position performs unexpectedly, GSK Plc 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 GSK Plc will offset losses from the drop in GSK Plc's long position.SoundHound vs. Snowflake | SoundHound vs. Zoom Video Communications | SoundHound vs. Shopify | SoundHound vs. Workday |
GSK Plc vs. Santen Pharmaceutical Co | GSK Plc vs. Ono Pharmaceutical Co | GSK Plc vs. Grifols SA ADR | GSK Plc vs. Pfizer Inc |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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