Correlation Between SoundHound and Exela Technologies

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

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

Diversification Opportunities for SoundHound and Exela Technologies

0.0

Correlation Coefficient

SoundHound  Exela Technologies

Pay attention - limited upside

The 3 months correlation between SoundHound and Exela is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SoundHound AI and Exela Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exela Technologies 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 Exela Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exela Technologies has no effect on the direction of SoundHound i.e., SoundHound and Exela Technologies go up and down completely randomly.

Pair Corralation between SoundHound and Exela Technologies

If you would invest  895.00  in SoundHound AI on December 2, 2024 and sell it today you would earn a total of  187.00  from holding SoundHound AI or generate 20.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

SoundHound AI  vs.  Exela Technologies

SoundHound AI

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SoundHound AI are ranked lower than 6 (%) 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.

Exela Technologies

Risk-Adjusted Performance

Very Weak

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

Pair Trading with SoundHound and Exela Technologies

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

The idea behind SoundHound AI and Exela Technologies 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.