Correlation Between MSA Safety and Iveda Solutions

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

By analyzing existing cross correlation between MSA Safety and Iveda Solutions, you can compare the effects of market volatilities on MSA Safety and Iveda Solutions 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 MSA Safety with a short position of Iveda Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSA Safety and Iveda Solutions.

Diversification Opportunities for MSA Safety and Iveda Solutions

0.31

Correlation Coefficient

MSA Safety  Iveda Solutions

Weak diversification

The 3 months correlation between MSA and Iveda is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding MSA Safety and Iveda Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iveda Solutions and MSA Safety 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 MSA Safety are associated (or correlated) with Iveda Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iveda Solutions has no effect on the direction of MSA Safety i.e., MSA Safety and Iveda Solutions go up and down completely randomly.

Pair Corralation between MSA Safety and Iveda Solutions

Considering the 90-day investment horizon MSA Safety is expected to generate 2.91 times less return on investment than Iveda Solutions. But when comparing it to its historical volatility, MSA Safety is 7.27 times less risky than Iveda Solutions. It trades about 0.15 of its potential returns per unit of risk. Iveda Solutions is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  184.00  in Iveda Solutions on August 31, 2024 and sell it today you would earn a total of  6.00  from holding Iveda Solutions or generate 3.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

MSA Safety  vs.  Iveda Solutions

MSA Safety

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MSA Safety has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MSA Safety is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Iveda Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iveda Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with MSA Safety and Iveda Solutions

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

The idea behind MSA Safety and Iveda Solutions 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.