Correlation Between Guardforce and Direct Digital

Can any of the company-specific risk be diversified away by investing in both Guardforce and Direct Digital 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 Direct Digital 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 Direct Digital Holdings, you can compare the effects of market volatilities on Guardforce and Direct Digital 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 Direct Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardforce and Direct Digital.

Diversification Opportunities for Guardforce and Direct Digital

0.04

Correlation Coefficient

Guardforce  Direct Digital

Significant diversification

The 3 months correlation between Guardforce and Direct is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Guardforce AI Co and Direct Digital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direct Digital Holdings 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 Direct Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direct Digital Holdings has no effect on the direction of Guardforce i.e., Guardforce and Direct Digital go up and down completely randomly.

Pair Corralation between Guardforce and Direct Digital

If you would invest  14.00  in Guardforce AI Co on September 12, 2024 and sell it today you would earn a total of  11.00  from holding Guardforce AI Co or generate 78.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.96%
Values	Daily Returns

Guardforce AI Co  vs.  Direct Digital Holdings

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.

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 fairly stable basic indicators, Direct Digital is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Guardforce and Direct Digital

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

The idea behind Guardforce AI Co and Direct Digital Holdings 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.