Correlation Between SoundHound and Skanska AB

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

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

Diversification Opportunities for SoundHound and Skanska AB

-0.71

Correlation Coefficient

SoundHound  Skanska AB

Pay attention - limited upside

The 3 months correlation between SoundHound and Skanska is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding SoundHound AI and Skanska AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skanska AB ser 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 Skanska AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skanska AB ser has no effect on the direction of SoundHound i.e., SoundHound and Skanska AB go up and down completely randomly.

Pair Corralation between SoundHound and Skanska AB

Given the investment horizon of 90 days SoundHound AI is expected to under-perform the Skanska AB. In addition to that, SoundHound is 3.66 times more volatile than Skanska AB ser. It trades about -0.17 of its total potential returns per unit of risk. Skanska AB ser is currently generating about 0.06 per unit of volatility. If you would invest  2,112  in Skanska AB ser on December 30, 2024 and sell it today you would earn a total of  155.00  from holding Skanska AB ser or generate 7.34% 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.  Skanska AB ser

SoundHound AI

Risk-Adjusted Performance

Very Weak

Over the last 90 days SoundHound AI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Skanska AB ser

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Skanska AB ser are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Skanska AB may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with SoundHound and Skanska AB

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

The idea behind SoundHound AI and Skanska AB ser 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.