Correlation Between Tandy Leather and Auddia

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

By analyzing existing cross correlation between Tandy Leather Factory and Auddia Inc, you can compare the effects of market volatilities on Tandy Leather and Auddia 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 Tandy Leather with a short position of Auddia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tandy Leather and Auddia.

Diversification Opportunities for Tandy Leather and Auddia

0.4

Correlation Coefficient

Tandy Leather  Auddia

Very weak diversification

The 3 months correlation between Tandy and Auddia is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Tandy Leather Factory and Auddia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auddia Inc and Tandy Leather 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 Tandy Leather Factory are associated (or correlated) with Auddia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auddia Inc has no effect on the direction of Tandy Leather i.e., Tandy Leather and Auddia go up and down completely randomly.

Pair Corralation between Tandy Leather and Auddia

Considering the 90-day investment horizon Tandy Leather Factory is expected to under-perform the Auddia. But the stock apears to be less risky and, when comparing its historical volatility, Tandy Leather Factory is 6.85 times less risky than Auddia. The stock trades about -0.07 of its potential returns per unit of risk. The Auddia Inc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1.80  in Auddia Inc on December 20, 2024 and sell it today you would earn a total of  0.09  from holding Auddia Inc or generate 5.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	74.58%
Values	Daily Returns

Tandy Leather Factory  vs.  Auddia Inc

Tandy Leather Factory

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tandy Leather Factory has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Auddia Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Auddia Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Auddia showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tandy Leather and Auddia

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

The idea behind Tandy Leather Factory and Auddia Inc 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.