Correlation Between Iveda Solutions and Allegion PLC

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

By analyzing existing cross correlation between Iveda Solutions and Allegion PLC, you can compare the effects of market volatilities on Iveda Solutions and Allegion PLC 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 Iveda Solutions with a short position of Allegion PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iveda Solutions and Allegion PLC.

Diversification Opportunities for Iveda Solutions and Allegion PLC

0.38

Correlation Coefficient

Iveda Solutions  Allegion PLC

Weak diversification

The 3 months correlation between Iveda and Allegion is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Iveda Solutions and Allegion PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegion PLC and Iveda Solutions 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 Iveda Solutions are associated (or correlated) with Allegion PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegion PLC has no effect on the direction of Iveda Solutions i.e., Iveda Solutions and Allegion PLC go up and down completely randomly.

Pair Corralation between Iveda Solutions and Allegion PLC

Given the investment horizon of 90 days Iveda Solutions is expected to under-perform the Allegion PLC. In addition to that, Iveda Solutions is 5.86 times more volatile than Allegion PLC. It trades about -0.15 of its total potential returns per unit of risk. Allegion PLC is currently generating about -0.01 per unit of volatility. If you would invest  13,044  in Allegion PLC on December 29, 2024 and sell it today you would lose (215.00) from holding Allegion PLC or give up 1.65% of portfolio value over 90 days.

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

Iveda Solutions  vs.  Allegion PLC

Iveda Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Iveda Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Allegion PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Allegion PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Allegion PLC is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Iveda Solutions and Allegion PLC

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

The idea behind Iveda Solutions and Allegion PLC 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..