Correlation Between Auddia and Shotspotter
Can any of the company-specific risk be diversified away by investing in both Auddia and Shotspotter 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 Auddia and Shotspotter into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auddia Inc and Shotspotter, you can compare the effects of market volatilities on Auddia and Shotspotter 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 Auddia with a short position of Shotspotter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auddia and Shotspotter.
Diversification Opportunities for Auddia and Shotspotter
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Auddia and Shotspotter is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Auddia Inc and Shotspotter in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shotspotter and Auddia 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 Auddia Inc are associated (or correlated) with Shotspotter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shotspotter has no effect on the direction of Auddia i.e., Auddia and Shotspotter go up and down completely randomly.
Pair Corralation between Auddia and Shotspotter
Given the investment horizon of 90 days Auddia Inc is expected to under-perform the Shotspotter. In addition to that, Auddia is 1.12 times more volatile than Shotspotter. It trades about -0.13 of its total potential returns per unit of risk. Shotspotter is currently generating about 0.1 per unit of volatility. If you would invest 1,143 in Shotspotter on August 24, 2024 and sell it today you would earn a total of 93.00 from holding Shotspotter or generate 8.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auddia Inc vs. Shotspotter
Performance |
| Timeline |
| Auddia Inc |
| Shotspotter |
Auddia and Shotspotter Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auddia and Shotspotter
The main advantage of trading using opposite Auddia and Shotspotter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auddia position performs unexpectedly, Shotspotter 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 Shotspotter will offset losses from the drop in Shotspotter's long position.The idea behind Auddia Inc and Shotspotter 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.| Shotspotter vs. Enfusion | Shotspotter vs. ON24 Inc | Shotspotter vs. Paycor HCM | Shotspotter vs. Research Solutions |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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