Correlation Between AudioEye and Sonida Senior

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

Diversification Opportunities for AudioEye and Sonida Senior

0.95
  Correlation Coefficient

Almost no diversification

The 3 months correlation between AudioEye and Sonida is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding AudioEye and Sonida Senior Living in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonida Senior Living and AudioEye 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 AudioEye are associated (or correlated) with Sonida Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonida Senior Living has no effect on the direction of AudioEye i.e., AudioEye and Sonida Senior go up and down completely randomly.

Pair Corralation between AudioEye and Sonida Senior

Given the investment horizon of 90 days AudioEye is expected to generate 2.92 times less return on investment than Sonida Senior. But when comparing it to its historical volatility, AudioEye is 1.1 times less risky than Sonida Senior. It trades about 0.05 of its potential returns per unit of risk. Sonida Senior Living is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  720.00  in Sonida Senior Living on December 30, 2023 and sell it today you would earn a total of  2,137  from holding Sonida Senior Living or generate 296.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

AudioEye  vs.  Sonida Senior Living

 Performance 
       Timeline  
AudioEye 

Risk-Adjusted Performance

21 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in AudioEye are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, AudioEye exhibited solid returns over the last few months and may actually be approaching a breakup point.
Sonida Senior Living 

Risk-Adjusted Performance

21 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Sonida Senior Living are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal fundamental indicators, Sonida Senior sustained solid returns over the last few months and may actually be approaching a breakup point.

AudioEye and Sonida Senior Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AudioEye and Sonida Senior

The main advantage of trading using opposite AudioEye and Sonida Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AudioEye position performs unexpectedly, Sonida Senior 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 Sonida Senior will offset losses from the drop in Sonida Senior's long position.
The idea behind AudioEye and Sonida Senior Living 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

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