Correlation Between Guardforce and SPS Commerce

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

Diversification Opportunities for Guardforce and SPS Commerce

0.27

Correlation Coefficient

Guardforce  SPS Commerce

Modest diversification

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

Pair Corralation between Guardforce and SPS Commerce

Assuming the 90 days horizon Guardforce AI Co is expected to generate 16.85 times more return on investment than SPS Commerce. However, Guardforce is 16.85 times more volatile than SPS Commerce. It trades about 0.15 of its potential returns per unit of risk. SPS Commerce is currently generating about -0.01 per unit of risk. If you would invest  12.00  in Guardforce AI Co on September 21, 2024 and sell it today you would earn a total of  14.00  from holding Guardforce AI Co or generate 116.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	84.13%
Values	Daily Returns

Guardforce AI Co  vs.  SPS Commerce

Guardforce AI

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guardforce AI Co are ranked lower than 11 (%) 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.

SPS Commerce

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPS Commerce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, SPS Commerce is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Guardforce and SPS Commerce

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

The idea behind Guardforce AI Co and SPS Commerce 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.