Correlation Between Guardforce and Brinks

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

Diversification Opportunities for Guardforce and Brinks

0.25

Correlation Coefficient

Guardforce  Brinks

Modest diversification

The 3 months correlation between Guardforce and Brinks is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Guardforce AI Co and Brinks Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brinks Company 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 Brinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brinks Company has no effect on the direction of Guardforce i.e., Guardforce and Brinks go up and down completely randomly.

Pair Corralation between Guardforce and Brinks

Given the investment horizon of 90 days Guardforce AI Co is expected to generate 2.5 times more return on investment than Brinks. However, Guardforce is 2.5 times more volatile than Brinks Company. It trades about 0.08 of its potential returns per unit of risk. Brinks Company is currently generating about -0.08 per unit of risk. If you would invest  110.00  in Guardforce AI Co on September 4, 2024 and sell it today you would earn a total of  19.00  from holding Guardforce AI Co or generate 17.27% return on investment over 90 days.

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

Guardforce AI Co  vs.  Brinks Company

Guardforce AI

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Guardforce AI Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Guardforce demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Brinks Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brinks Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Guardforce and Brinks

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

The idea behind Guardforce AI Co and Brinks Company 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.