Correlation Between NETGEAR and Guardforce

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

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

Diversification Opportunities for NETGEAR and Guardforce

0.35

Correlation Coefficient

NETGEAR  Guardforce

Weak diversification

The 3 months correlation between NETGEAR and Guardforce is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and Guardforce AI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardforce AI and NETGEAR 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 NETGEAR 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 NETGEAR i.e., NETGEAR and Guardforce go up and down completely randomly.

Pair Corralation between NETGEAR and Guardforce

Given the investment horizon of 90 days NETGEAR is expected to generate 6.8 times less return on investment than Guardforce. But when comparing it to its historical volatility, NETGEAR is 5.42 times less risky than Guardforce. It trades about 0.04 of its potential returns per unit of risk. Guardforce AI Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  130.00  in Guardforce AI Co on November 28, 2024 and sell it today you would lose (14.00) from holding Guardforce AI Co or give up 10.77% of portfolio value over 90 days.

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

NETGEAR  vs.  Guardforce AI Co

NETGEAR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, NETGEAR is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Guardforce AI

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guardforce AI Co are ranked lower than 3 (%) 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 NETGEAR and Guardforce

The main advantage of trading using opposite NETGEAR and Guardforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NETGEAR 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 NETGEAR 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.