Correlation Between Guardforce and ADEIA P

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

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

Diversification Opportunities for Guardforce and ADEIA P

0.62

Correlation Coefficient

Guardforce  ADEIA P

Poor diversification

The 3 months correlation between Guardforce and ADEIA is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Guardforce AI Co and ADEIA P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADEIA P and Guardforce 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 Guardforce AI Co are associated (or correlated) with ADEIA P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADEIA P has no effect on the direction of Guardforce i.e., Guardforce and ADEIA P go up and down completely randomly.

Pair Corralation between Guardforce and ADEIA P

Assuming the 90 days horizon Guardforce AI Co is expected to generate 10.78 times more return on investment than ADEIA P. However, Guardforce is 10.78 times more volatile than ADEIA P. It trades about 0.12 of its potential returns per unit of risk. ADEIA P is currently generating about 0.09 per unit of risk. If you would invest  18.00  in Guardforce AI Co on September 24, 2024 and sell it today you would earn a total of  9.30  from holding Guardforce AI Co or generate 51.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	84.62%
Values	Daily Returns

Guardforce AI Co  vs.  ADEIA P

Guardforce AI

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guardforce AI Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent forward indicators, Guardforce showed solid returns over the last few months and may actually be approaching a breakup point.

ADEIA P

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ADEIA P are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, ADEIA P sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guardforce and ADEIA P

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

The idea behind Guardforce AI Co and ADEIA P 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.