Correlation Between Iveda Solutions and Locafy

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

By analyzing existing cross correlation between Iveda Solutions Warrant and Locafy Limited, you can compare the effects of market volatilities on Iveda Solutions and Locafy 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 Locafy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iveda Solutions and Locafy.

Diversification Opportunities for Iveda Solutions and Locafy

0.18

Correlation Coefficient

Iveda Solutions  Locafy

Average diversification

The 3 months correlation between Iveda and Locafy is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Iveda Solutions Warrant and Locafy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Locafy Limited 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 Warrant are associated (or correlated) with Locafy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Locafy Limited has no effect on the direction of Iveda Solutions i.e., Iveda Solutions and Locafy go up and down completely randomly.

Pair Corralation between Iveda Solutions and Locafy

Assuming the 90 days horizon Iveda Solutions is expected to generate 1.6 times less return on investment than Locafy. But when comparing it to its historical volatility, Iveda Solutions Warrant is 1.07 times less risky than Locafy. It trades about 0.17 of its potential returns per unit of risk. Locafy Limited is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  740.00  in Locafy Limited on November 28, 2024 and sell it today you would earn a total of  2,370  from holding Locafy Limited or generate 320.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.0%
Values	Daily Returns

Iveda Solutions Warrant  vs.  Locafy Limited

Iveda Solutions Warrant

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Iveda Solutions Warrant are ranked lower than 13 (%) 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.

Locafy Limited

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Locafy Limited are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Locafy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Iveda Solutions and Locafy

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

The idea behind Iveda Solutions Warrant and Locafy Limited 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.