Correlation Between Global Digital and Guardforce

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

By analyzing existing cross correlation between Global Digital Soltn and Guardforce AI Co, you can compare the effects of market volatilities on Global Digital and Guardforce 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 Global Digital with a short position of Guardforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Digital and Guardforce.

Diversification Opportunities for Global Digital and Guardforce

0.05

Correlation Coefficient

Global Digital  Guardforce

Significant diversification

The 3 months correlation between Global and Guardforce is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Global Digital Soltn and Guardforce AI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardforce AI and Global Digital 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 Global Digital Soltn are associated (or correlated) with Guardforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardforce AI has no effect on the direction of Global Digital i.e., Global Digital and Guardforce go up and down completely randomly.

Pair Corralation between Global Digital and Guardforce

Given the investment horizon of 90 days Global Digital Soltn is expected to generate 21.33 times more return on investment than Guardforce. However, Global Digital is 21.33 times more volatile than Guardforce AI Co. It trades about 0.1 of its potential returns per unit of risk. Guardforce AI Co is currently generating about -0.1 per unit of risk. If you would invest  0.01  in Global Digital Soltn on September 24, 2024 and sell it today you would earn a total of  0.00  from holding Global Digital Soltn or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

Global Digital Soltn  vs.  Guardforce AI Co

Global Digital Soltn

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global Digital Soltn are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Global Digital demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Guardforce AI

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guardforce AI Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Guardforce may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Global Digital and Guardforce

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

The idea behind Global Digital Soltn and Guardforce AI Co 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.