Correlation Between Guardforce and Iveda Solutions

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

Diversification Opportunities for Guardforce and Iveda Solutions

0.52

Correlation Coefficient

Guardforce  Iveda Solutions

Very weak diversification

The 3 months correlation between Guardforce and Iveda is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Guardforce AI Co and Iveda Solutions Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iveda Solutions Warrant 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 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 Warrant has no effect on the direction of Guardforce i.e., Guardforce and Iveda Solutions go up and down completely randomly.

Pair Corralation between Guardforce and Iveda Solutions

Given the investment horizon of 90 days Guardforce AI Co is expected to under-perform the Iveda Solutions. But the stock apears to be less risky and, when comparing its historical volatility, Guardforce AI Co is 1.7 times less risky than Iveda Solutions. The stock trades about -0.01 of its potential returns per unit of risk. The Iveda Solutions Warrant is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  25.00  in Iveda Solutions Warrant on December 30, 2024 and sell it today you would lose (10.00) from holding Iveda Solutions Warrant or give up 40.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.16%
Values	Daily Returns

Guardforce AI Co  vs.  Iveda Solutions Warrant

Guardforce AI

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guardforce AI Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Iveda Solutions Warrant

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Iveda Solutions Warrant are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Iveda Solutions showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guardforce and Iveda Solutions

The main advantage of trading using opposite Guardforce and Iveda Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guardforce 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 Guardforce AI Co and Iveda Solutions Warrant 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.