Correlation Between SoundHound and Carbios SAS

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Can any of the company-specific risk be diversified away by investing in both SoundHound and Carbios SAS 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 SoundHound and Carbios SAS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SoundHound AI and Carbios SAS, you can compare the effects of market volatilities on SoundHound and Carbios SAS 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 SoundHound with a short position of Carbios SAS. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoundHound and Carbios SAS.

Diversification Opportunities for SoundHound and Carbios SAS

-0.56
  Correlation Coefficient

Excellent diversification

The 3 months correlation between SoundHound and Carbios is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding SoundHound AI and Carbios SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carbios SAS and SoundHound 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 SoundHound AI are associated (or correlated) with Carbios SAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carbios SAS has no effect on the direction of SoundHound i.e., SoundHound and Carbios SAS go up and down completely randomly.

Pair Corralation between SoundHound and Carbios SAS

Given the investment horizon of 90 days SoundHound AI is expected to under-perform the Carbios SAS. In addition to that, SoundHound is 1.45 times more volatile than Carbios SAS. It trades about -0.23 of its total potential returns per unit of risk. Carbios SAS is currently generating about -0.02 per unit of volatility. If you would invest  726.00  in Carbios SAS on October 22, 2024 and sell it today you would lose (36.00) from holding Carbios SAS or give up 4.96% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

SoundHound AI  vs.  Carbios SAS

 Performance 
       Timeline  
SoundHound AI 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in SoundHound AI are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, SoundHound displayed solid returns over the last few months and may actually be approaching a breakup point.
Carbios SAS 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Carbios SAS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

SoundHound and Carbios SAS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SoundHound and Carbios SAS

The main advantage of trading using opposite SoundHound and Carbios SAS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoundHound position performs unexpectedly, Carbios SAS 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 Carbios SAS will offset losses from the drop in Carbios SAS's long position.
The idea behind SoundHound AI and Carbios SAS 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 Transaction History module to view history of all your transactions and understand their impact on performance.

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