Correlation Between Liberty Defense and Guardforce

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

By analyzing existing cross correlation between Liberty Defense Holdings and Guardforce AI Co, you can compare the effects of market volatilities on Liberty Defense and Guardforce 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 Liberty Defense with a short position of Guardforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Defense and Guardforce.

Diversification Opportunities for Liberty Defense and Guardforce

-0.3

Correlation Coefficient

Liberty Defense  Guardforce

Very good diversification

The 3 months correlation between Liberty and Guardforce is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Defense Holdings and Guardforce AI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardforce AI and Liberty Defense 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 Liberty Defense Holdings are associated (or correlated) with Guardforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardforce AI has no effect on the direction of Liberty Defense i.e., Liberty Defense and Guardforce go up and down completely randomly.

Pair Corralation between Liberty Defense and Guardforce

Assuming the 90 days horizon Liberty Defense Holdings is expected to under-perform the Guardforce. In addition to that, Liberty Defense is 1.57 times more volatile than Guardforce AI Co. It trades about -0.04 of its total potential returns per unit of risk. Guardforce AI Co is currently generating about 0.11 per unit of volatility. If you would invest  115.00  in Guardforce AI Co on September 12, 2024 and sell it today you would earn a total of  38.00  from holding Guardforce AI Co or generate 33.04% return on investment over 90 days.

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

Liberty Defense Holdings  vs.  Guardforce AI Co

Liberty Defense Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liberty Defense Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Guardforce AI

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guardforce AI Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Guardforce demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Liberty Defense and Guardforce

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

The idea behind Liberty Defense Holdings and Guardforce AI Co 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.