Correlation Between Guardforce and NextPlat Corp

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

Diversification Opportunities for Guardforce and NextPlat Corp

-0.35

Correlation Coefficient

Guardforce  NextPlat Corp

Very good diversification

The 3 months correlation between Guardforce and NextPlat is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Guardforce AI Co and NextPlat Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextPlat Corp 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 NextPlat Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextPlat Corp has no effect on the direction of Guardforce i.e., Guardforce and NextPlat Corp go up and down completely randomly.

Pair Corralation between Guardforce and NextPlat Corp

Assuming the 90 days horizon Guardforce AI Co is expected to generate 2.2 times more return on investment than NextPlat Corp. However, Guardforce is 2.2 times more volatile than NextPlat Corp. It trades about 0.13 of its potential returns per unit of risk. NextPlat Corp is currently generating about -0.03 per unit of risk. If you would invest  12.00  in Guardforce AI Co on September 22, 2024 and sell it today you would earn a total of  8.00  from holding Guardforce AI Co or generate 66.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Guardforce AI Co  vs.  NextPlat Corp

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.

NextPlat Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NextPlat Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's essential indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Guardforce and NextPlat Corp

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

The idea behind Guardforce AI Co and NextPlat Corp 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.