Correlation Between First Responder and Iveda Solutions

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

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

Diversification Opportunities for First Responder and Iveda Solutions

-0.22

Correlation Coefficient

First Responder  Iveda Solutions

Very good diversification

The 3 months correlation between First and Iveda is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding First Responder Technologies and Iveda Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iveda Solutions and First Responder 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 First Responder Technologies are associated (or correlated) with Iveda Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iveda Solutions has no effect on the direction of First Responder i.e., First Responder and Iveda Solutions go up and down completely randomly.

Pair Corralation between First Responder and Iveda Solutions

Assuming the 90 days horizon First Responder Technologies is expected to generate 7.78 times more return on investment than Iveda Solutions. However, First Responder is 7.78 times more volatile than Iveda Solutions. It trades about 0.08 of its potential returns per unit of risk. Iveda Solutions is currently generating about 0.04 per unit of risk. If you would invest  7.81  in First Responder Technologies on October 4, 2024 and sell it today you would lose (5.71) from holding First Responder Technologies or give up 73.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

First Responder Technologies  vs.  Iveda Solutions

First Responder Tech

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Responder Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, First Responder reported solid returns over the last few months and may actually be approaching a breakup point.

Iveda Solutions

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Iveda Solutions are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent fundamental indicators, Iveda Solutions sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Responder and Iveda Solutions

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

The idea behind First Responder Technologies and Iveda Solutions 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 Stocks Directory module to find actively traded stocks across global markets.