Correlation Between Auddia and LifeSpeak
Can any of the company-specific risk be diversified away by investing in both Auddia and LifeSpeak 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 LifeSpeak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auddia Inc and LifeSpeak, you can compare the effects of market volatilities on Auddia and LifeSpeak 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 LifeSpeak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auddia and LifeSpeak.
Diversification Opportunities for Auddia and LifeSpeak
Pay attention - limited upside
The 3 months correlation between Auddia and LifeSpeak is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Auddia Inc and LifeSpeak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LifeSpeak 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 LifeSpeak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LifeSpeak has no effect on the direction of Auddia i.e., Auddia and LifeSpeak go up and down completely randomly.
Pair Corralation between Auddia and LifeSpeak
Assuming the 90 days horizon Auddia Inc is expected to generate 3.06 times more return on investment than LifeSpeak. However, Auddia is 3.06 times more volatile than LifeSpeak. It trades about -0.03 of its potential returns per unit of risk. LifeSpeak is currently generating about -0.21 per unit of risk. If you would invest 4.00 in Auddia Inc on August 25, 2024 and sell it today you would lose (1.24) from holding Auddia Inc or give up 31.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 59.09% |
| Values | Daily Returns |
Auddia Inc vs. LifeSpeak
Performance |
| Timeline |
| Auddia Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| LifeSpeak |
Auddia and LifeSpeak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auddia and LifeSpeak
The main advantage of trading using opposite Auddia and LifeSpeak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auddia position performs unexpectedly, LifeSpeak 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 LifeSpeak will offset losses from the drop in LifeSpeak's long position.The idea behind Auddia Inc and LifeSpeak 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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