Correlation Between Mistras and Guardforce

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

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

Diversification Opportunities for Mistras and Guardforce

-0.1

Correlation Coefficient

Mistras  Guardforce

Good diversification

The 3 months correlation between Mistras and Guardforce is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Mistras Group and Guardforce AI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardforce AI and Mistras 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 Mistras Group 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 Mistras i.e., Mistras and Guardforce go up and down completely randomly.

Pair Corralation between Mistras and Guardforce

Allowing for the 90-day total investment horizon Mistras Group is expected to under-perform the Guardforce. But the stock apears to be less risky and, when comparing its historical volatility, Mistras Group is 10.41 times less risky than Guardforce. The stock trades about -0.04 of its potential returns per unit of risk. The Guardforce AI Co is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Guardforce AI Co on September 12, 2024 and sell it today you would earn a total of  15.00  from holding Guardforce AI Co or generate 107.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	79.69%
Values	Daily Returns

Mistras Group  vs.  Guardforce AI Co

Mistras Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mistras Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Guardforce AI

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guardforce AI Co are ranked lower than 11 (%) 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.

Pair Trading with Mistras and Guardforce

The main advantage of trading using opposite Mistras and Guardforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mistras 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 Mistras Group 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.

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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.