Correlation Between Iveda Solutions and ADT

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

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

Diversification Opportunities for Iveda Solutions and ADT

-0.34

Correlation Coefficient

Iveda Solutions  ADT

Very good diversification

The 3 months correlation between Iveda and ADT is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Iveda Solutions and ADT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADT Inc and Iveda Solutions 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 Iveda Solutions are associated (or correlated) with ADT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADT Inc has no effect on the direction of Iveda Solutions i.e., Iveda Solutions and ADT go up and down completely randomly.

Pair Corralation between Iveda Solutions and ADT

Given the investment horizon of 90 days Iveda Solutions is expected to under-perform the ADT. In addition to that, Iveda Solutions is 3.19 times more volatile than ADT Inc. It trades about -0.07 of its total potential returns per unit of risk. ADT Inc is currently generating about 0.06 per unit of volatility. If you would invest  761.00  in ADT Inc on February 3, 2025 and sell it today you would earn a total of  54.00  from holding ADT Inc or generate 7.1% return on investment over 90 days.

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

Iveda Solutions  vs.  ADT Inc

Iveda Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Iveda Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in June 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

ADT Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ADT Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental indicators, ADT may actually be approaching a critical reversion point that can send shares even higher in June 2025.

Pair Trading with Iveda Solutions and ADT

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

The idea behind Iveda Solutions and ADT Inc 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.