Correlation Between Datadog and AMTD Digital
Can any of the company-specific risk be diversified away by investing in both Datadog and AMTD Digital 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 Datadog and AMTD Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Datadog and AMTD Digital, you can compare the effects of market volatilities on Datadog and AMTD Digital 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 Datadog with a short position of AMTD Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datadog and AMTD Digital.
Diversification Opportunities for Datadog and AMTD Digital
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Datadog and AMTD is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Datadog and AMTD Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMTD Digital and Datadog 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 Datadog are associated (or correlated) with AMTD Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMTD Digital has no effect on the direction of Datadog i.e., Datadog and AMTD Digital go up and down completely randomly.
Pair Corralation between Datadog and AMTD Digital
Given the investment horizon of 90 days Datadog is expected to generate 0.29 times more return on investment than AMTD Digital. However, Datadog is 3.49 times less risky than AMTD Digital. It trades about 0.31 of its potential returns per unit of risk. AMTD Digital is currently generating about 0.02 per unit of risk. If you would invest 11,421 in Datadog on August 27, 2024 and sell it today you would earn a total of 4,242 from holding Datadog or generate 37.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Datadog vs. AMTD Digital
Performance |
| Timeline |
| Datadog |
| AMTD Digital |
Datadog and AMTD Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Datadog and AMTD Digital
The main advantage of trading using opposite Datadog and AMTD Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Datadog position performs unexpectedly, AMTD Digital 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 AMTD Digital will offset losses from the drop in AMTD Digital's long position.The idea behind Datadog and AMTD Digital 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.Check out your portfolio center.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.
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