Correlation Between Resideo Technologies and Guardforce

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

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

Diversification Opportunities for Resideo Technologies and Guardforce

0.04

Correlation Coefficient

Resideo Technologies  Guardforce

Significant diversification

The 3 months correlation between Resideo and Guardforce is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Resideo Technologies and Guardforce AI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardforce AI and Resideo Technologies 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 Resideo Technologies 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 Resideo Technologies i.e., Resideo Technologies and Guardforce go up and down completely randomly.

Pair Corralation between Resideo Technologies and Guardforce

Given the investment horizon of 90 days Resideo Technologies is expected to generate 6.49 times less return on investment than Guardforce. But when comparing it to its historical volatility, Resideo Technologies is 5.74 times less risky than Guardforce. It trades about 0.03 of its potential returns per unit of risk. Guardforce AI Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  698.00  in Guardforce AI Co on October 12, 2024 and sell it today you would lose (485.00) from holding Guardforce AI Co or give up 69.48% of portfolio value over 90 days.

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

Resideo Technologies  vs.  Guardforce AI Co

Resideo Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Resideo Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Resideo Technologies may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Guardforce AI

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guardforce AI Co are ranked lower than 10 (%) 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 Resideo Technologies and Guardforce

The main advantage of trading using opposite Resideo Technologies and Guardforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Resideo Technologies 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 Resideo Technologies 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.