Correlation Between Guardforce and NETGEAR

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

Diversification Opportunities for Guardforce and NETGEAR

0.53

Correlation Coefficient

Guardforce  NETGEAR

Very weak diversification

The 3 months correlation between Guardforce and NETGEAR is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Guardforce AI Co and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR 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 NETGEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NETGEAR has no effect on the direction of Guardforce i.e., Guardforce and NETGEAR go up and down completely randomly.

Pair Corralation between Guardforce and NETGEAR

Given the investment horizon of 90 days Guardforce AI Co is expected to generate 4.1 times more return on investment than NETGEAR. However, Guardforce is 4.1 times more volatile than NETGEAR. It trades about -0.01 of its potential returns per unit of risk. NETGEAR is currently generating about -0.06 per unit of risk. If you would invest  156.00  in Guardforce AI Co on December 30, 2024 and sell it today you would lose (53.00) from holding Guardforce AI Co or give up 33.97% of portfolio value over 90 days.

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

Guardforce AI Co  vs.  NETGEAR

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.

NETGEAR

Risk-Adjusted Performance

Very Weak

Over the last 90 days NETGEAR has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Guardforce and NETGEAR

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

The idea behind Guardforce AI Co and NETGEAR 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.