Correlation Between Shopify and AMTD Digital
Can any of the company-specific risk be diversified away by investing in both Shopify 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 Shopify and AMTD Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shopify and AMTD Digital, you can compare the effects of market volatilities on Shopify 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 Shopify with a short position of AMTD Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shopify and AMTD Digital.
Diversification Opportunities for Shopify and AMTD Digital
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Shopify and AMTD is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Shopify and AMTD Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMTD Digital and Shopify 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 Shopify 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 Shopify i.e., Shopify and AMTD Digital go up and down completely randomly.
Pair Corralation between Shopify and AMTD Digital
Given the investment horizon of 90 days Shopify is expected to under-perform the AMTD Digital. But the stock apears to be less risky and, when comparing its historical volatility, Shopify is 1.08 times less risky than AMTD Digital. The stock trades about -0.07 of its potential returns per unit of risk. The AMTD Digital is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 258.00 in AMTD Digital on October 20, 2024 and sell it today you would earn a total of 13.00 from holding AMTD Digital or generate 5.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shopify vs. AMTD Digital
Performance |
| Timeline |
| Shopify |
| AMTD Digital |
Shopify and AMTD Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shopify and AMTD Digital
The main advantage of trading using opposite Shopify and AMTD Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shopify 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 Shopify 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.| AMTD Digital vs. HeartCore Enterprises | AMTD Digital vs. Beamr Imaging Ltd | AMTD Digital vs. CXApp Inc | AMTD Digital vs. SoundHound AI |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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