Correlation Between SOS and Veritone
Can any of the company-specific risk be diversified away by investing in both SOS and Veritone 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 SOS and Veritone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOS Limited and Veritone, you can compare the effects of market volatilities on SOS and Veritone 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 SOS with a short position of Veritone. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOS and Veritone.
Diversification Opportunities for SOS and Veritone
Poor diversification
The 3 months correlation between SOS and Veritone is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding SOS Limited and Veritone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veritone and SOS 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 SOS Limited are associated (or correlated) with Veritone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veritone has no effect on the direction of SOS i.e., SOS and Veritone go up and down completely randomly.
Pair Corralation between SOS and Veritone
Considering the 90-day investment horizon SOS Limited is expected to under-perform the Veritone. In addition to that, SOS is 1.12 times more volatile than Veritone. It trades about -0.01 of its total potential returns per unit of risk. Veritone is currently generating about 0.01 per unit of volatility. If you would invest 765.00 in Veritone on August 30, 2024 and sell it today you would lose (498.00) from holding Veritone or give up 65.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SOS Limited vs. Veritone
Performance |
| Timeline |
| SOS Limited |
| Veritone |
SOS and Veritone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOS and Veritone
The main advantage of trading using opposite SOS and Veritone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOS position performs unexpectedly, Veritone 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 Veritone will offset losses from the drop in Veritone's long position.The idea behind SOS Limited and Veritone 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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