Correlation Between Direct Digital and Guardforce

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

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

Diversification Opportunities for Direct Digital and Guardforce

-0.12

Correlation Coefficient

Direct Digital  Guardforce

Good diversification

The 3 months correlation between Direct and Guardforce is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Direct Digital Holdings and Guardforce AI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardforce AI and Direct Digital 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 Direct Digital Holdings are associated (or correlated) with Guardforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardforce AI has no effect on the direction of Direct Digital i.e., Direct Digital and Guardforce go up and down completely randomly.

Pair Corralation between Direct Digital and Guardforce

Given the investment horizon of 90 days Direct Digital is expected to generate 82.66 times less return on investment than Guardforce. But when comparing it to its historical volatility, Direct Digital Holdings is 12.59 times less risky than Guardforce. It trades about 0.02 of its potential returns per unit of risk. Guardforce AI Co is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  40.00  in Guardforce AI Co on September 12, 2024 and sell it today you would lose (15.00) from holding Guardforce AI Co or give up 37.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	78.25%
Values	Daily Returns

Direct Digital Holdings  vs.  Guardforce AI Co

Direct Digital Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Direct Digital Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Guardforce AI

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guardforce AI Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal forward indicators, Guardforce showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Direct Digital and Guardforce

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

The idea behind Direct Digital Holdings and Guardforce AI Co 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.