Correlation Between MSA Safety and Guardforce

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

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

Diversification Opportunities for MSA Safety and Guardforce

0.38

Correlation Coefficient

MSA Safety  Guardforce

Weak diversification

The 3 months correlation between MSA and Guardforce is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding MSA Safety and Guardforce AI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardforce AI and MSA Safety 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 MSA Safety 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 MSA Safety i.e., MSA Safety and Guardforce go up and down completely randomly.

Pair Corralation between MSA Safety and Guardforce

Considering the 90-day investment horizon MSA Safety is expected to under-perform the Guardforce. But the stock apears to be less risky and, when comparing its historical volatility, MSA Safety is 11.02 times less risky than Guardforce. The stock trades about -0.26 of its potential returns per unit of risk. The Guardforce AI Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  128.00  in Guardforce AI Co on October 5, 2024 and sell it today you would earn a total of  15.00  from holding Guardforce AI Co or generate 11.72% return on investment over 90 days.

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

MSA Safety  vs.  Guardforce AI Co

MSA Safety

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MSA Safety has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MSA Safety is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Guardforce AI

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Guardforce AI Co are ranked lower than 5 (%) 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 MSA Safety and Guardforce

The main advantage of trading using opposite MSA Safety and Guardforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSA Safety 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 MSA Safety 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.