Correlation Between Semtech and SoundHound

Can any of the company-specific risk be diversified away by investing in both Semtech and SoundHound 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 Semtech and SoundHound into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Semtech and SoundHound AI, you can compare the effects of market volatilities on Semtech and SoundHound 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 Semtech with a short position of SoundHound. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semtech and SoundHound.

Diversification Opportunities for Semtech and SoundHound

0.53

Correlation Coefficient

Semtech  SoundHound

Very weak diversification

The 3 months correlation between Semtech and SoundHound is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Semtech and SoundHound AI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoundHound AI and Semtech 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 Semtech are associated (or correlated) with SoundHound. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoundHound AI has no effect on the direction of Semtech i.e., Semtech and SoundHound go up and down completely randomly.

Pair Corralation between Semtech and SoundHound

Given the investment horizon of 90 days Semtech is expected to generate 0.8 times more return on investment than SoundHound. However, Semtech is 1.26 times less risky than SoundHound. It trades about 0.15 of its potential returns per unit of risk. SoundHound AI is currently generating about -0.01 per unit of risk. If you would invest  4,854  in Semtech on August 19, 2025 and sell it today you would earn a total of  1,806  from holding Semtech or generate 37.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Semtech  vs.  SoundHound AI

Semtech

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Semtech are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Semtech exhibited solid returns over the last few months and may actually be approaching a breakup point.

SoundHound AI

Risk-Adjusted Performance

Weakest

Over the last 90 days SoundHound AI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, SoundHound is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Semtech and SoundHound

The main advantage of trading using opposite Semtech and SoundHound positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Semtech position performs unexpectedly, SoundHound 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 SoundHound will offset losses from the drop in SoundHound's long position.

The idea behind Semtech and SoundHound AI 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.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.