Correlation Between VirTra and SoundHound

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

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

Diversification Opportunities for VirTra and SoundHound

-0.22

Correlation Coefficient

VirTra  SoundHound

Very good diversification

The 3 months correlation between VirTra and SoundHound is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding VirTra Inc and SoundHound AI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoundHound AI and VirTra 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 VirTra Inc are associated (or correlated) with SoundHound. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoundHound AI has no effect on the direction of VirTra i.e., VirTra and SoundHound go up and down completely randomly.

Pair Corralation between VirTra and SoundHound

Given the investment horizon of 90 days VirTra Inc is expected to generate 0.24 times more return on investment than SoundHound. However, VirTra Inc is 4.11 times less risky than SoundHound. It trades about -0.11 of its potential returns per unit of risk. SoundHound AI is currently generating about -0.11 per unit of risk. If you would invest  637.00  in VirTra Inc on December 2, 2024 and sell it today you would lose (35.00) from holding VirTra Inc or give up 5.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

VirTra Inc  vs.  SoundHound AI

VirTra Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days VirTra Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

SoundHound AI

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SoundHound AI are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, SoundHound showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VirTra and SoundHound

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

The idea behind VirTra Inc and SoundHound AI 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.