Correlation Between Guardforce and Meridianlink

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

Diversification Opportunities for Guardforce and Meridianlink

0.27

Correlation Coefficient

Guardforce  Meridianlink

Modest diversification

The 3 months correlation between Guardforce and Meridianlink is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Guardforce AI Co and Meridianlink in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meridianlink 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 Meridianlink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meridianlink has no effect on the direction of Guardforce i.e., Guardforce and Meridianlink go up and down completely randomly.

Pair Corralation between Guardforce and Meridianlink

Assuming the 90 days horizon Guardforce AI Co is expected to generate 19.18 times more return on investment than Meridianlink. However, Guardforce is 19.18 times more volatile than Meridianlink. It trades about 0.16 of its potential returns per unit of risk. Meridianlink is currently generating about -0.04 per unit of risk. If you would invest  13.00  in Guardforce AI Co on September 15, 2024 and sell it today you would earn a total of  21.00  from holding Guardforce AI Co or generate 161.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	81.25%
Values	Daily Returns

Guardforce AI Co  vs.  Meridianlink

Guardforce AI

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guardforce AI Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, Guardforce showed solid returns over the last few months and may actually be approaching a breakup point.

Meridianlink

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Meridianlink has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Meridianlink is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Guardforce and Meridianlink

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

The idea behind Guardforce AI Co and Meridianlink 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.