Correlation Between SoundHound and CIGNA

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

By analyzing existing cross correlation between SoundHound AI and CIGNA P 7875, you can compare the effects of market volatilities on SoundHound and CIGNA 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 CIGNA. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoundHound and CIGNA.

Diversification Opportunities for SoundHound and CIGNA

0.68

Correlation Coefficient

SoundHound  CIGNA

Poor diversification

The 3 months correlation between SoundHound and CIGNA is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding SoundHound AI and CIGNA P 7875 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIGNA P 7875 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 CIGNA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIGNA P 7875 has no effect on the direction of SoundHound i.e., SoundHound and CIGNA go up and down completely randomly.

Pair Corralation between SoundHound and CIGNA

Given the investment horizon of 90 days SoundHound AI is expected to under-perform the CIGNA. In addition to that, SoundHound is 13.15 times more volatile than CIGNA P 7875. It trades about -0.17 of its total potential returns per unit of risk. CIGNA P 7875 is currently generating about -0.01 per unit of volatility. If you would invest  10,919  in CIGNA P 7875 on December 30, 2024 and sell it today you would lose (31.00) from holding CIGNA P 7875 or give up 0.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	53.23%
Values	Daily Returns

SoundHound AI  vs.  CIGNA P 7875

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.

CIGNA P 7875

Risk-Adjusted Performance

Very Weak

Over the last 90 days CIGNA P 7875 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CIGNA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SoundHound and CIGNA

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

The idea behind SoundHound AI and CIGNA P 7875 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.