Correlation Between Guardforce and Lytus Technologies

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

Diversification Opportunities for Guardforce and Lytus Technologies

0.39

Correlation Coefficient

Guardforce  Lytus Technologies

Weak diversification

The 3 months correlation between Guardforce and Lytus is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Guardforce AI Co and Lytus Technologies Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lytus Technologies 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 Lytus Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lytus Technologies has no effect on the direction of Guardforce i.e., Guardforce and Lytus Technologies go up and down completely randomly.

Pair Corralation between Guardforce and Lytus Technologies

Assuming the 90 days horizon Guardforce AI Co is expected to generate 1.2 times more return on investment than Lytus Technologies. However, Guardforce is 1.2 times more volatile than Lytus Technologies Holdings. It trades about 0.04 of its potential returns per unit of risk. Lytus Technologies Holdings is currently generating about -0.13 per unit of risk. If you would invest  35.00  in Guardforce AI Co on December 28, 2024 and sell it today you would lose (15.98) from holding Guardforce AI Co or give up 45.66% of portfolio value over 90 days.

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

Guardforce AI Co  vs.  Lytus Technologies Holdings

Guardforce AI

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guardforce AI Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal forward indicators, Guardforce showed solid returns over the last few months and may actually be approaching a breakup point.

Lytus Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lytus Technologies Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Guardforce and Lytus Technologies

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

The idea behind Guardforce AI Co and Lytus Technologies Holdings 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.