Correlation Between AMTD Digital and Trust Stamp
Can any of the company-specific risk be diversified away by investing in both AMTD Digital and Trust Stamp 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 AMTD Digital and Trust Stamp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMTD Digital and Trust Stamp, you can compare the effects of market volatilities on AMTD Digital and Trust Stamp 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 AMTD Digital with a short position of Trust Stamp. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMTD Digital and Trust Stamp.
Diversification Opportunities for AMTD Digital and Trust Stamp
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AMTD and Trust is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding AMTD Digital and Trust Stamp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trust Stamp and AMTD Digital 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 AMTD Digital are associated (or correlated) with Trust Stamp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trust Stamp has no effect on the direction of AMTD Digital i.e., AMTD Digital and Trust Stamp go up and down completely randomly.
Pair Corralation between AMTD Digital and Trust Stamp
Considering the 90-day investment horizon AMTD Digital is expected to under-perform the Trust Stamp. But the stock apears to be less risky and, when comparing its historical volatility, AMTD Digital is 2.01 times less risky than Trust Stamp. The stock trades about -0.01 of its potential returns per unit of risk. The Trust Stamp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 22.00 in Trust Stamp on August 28, 2024 and sell it today you would earn a total of 15.00 from holding Trust Stamp or generate 68.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMTD Digital vs. Trust Stamp
Performance |
| Timeline |
| AMTD Digital |
| Trust Stamp |
AMTD Digital and Trust Stamp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMTD Digital and Trust Stamp
The main advantage of trading using opposite AMTD Digital and Trust Stamp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMTD Digital position performs unexpectedly, Trust Stamp 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 Trust Stamp will offset losses from the drop in Trust Stamp's long position.The idea behind AMTD Digital and Trust Stamp 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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