Correlation Between AMTD IDEA and Goldman Sachs

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

By analyzing existing cross correlation between AMTD IDEA Group and Goldman Sachs Group, you can compare the effects of market volatilities on AMTD IDEA and Goldman Sachs 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 IDEA with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMTD IDEA and Goldman Sachs.

Diversification Opportunities for AMTD IDEA and Goldman Sachs

0.12

Correlation Coefficient

AMTD IDEA  Goldman Sachs

Average diversification

The 3 months correlation between AMTD and Goldman is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding AMTD IDEA Group and Goldman Sachs Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Group and AMTD IDEA 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 IDEA Group are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Group has no effect on the direction of AMTD IDEA i.e., AMTD IDEA and Goldman Sachs go up and down completely randomly.

Pair Corralation between AMTD IDEA and Goldman Sachs

Given the investment horizon of 90 days AMTD IDEA is expected to generate 1.67 times less return on investment than Goldman Sachs. In addition to that, AMTD IDEA is 1.99 times more volatile than Goldman Sachs Group. It trades about 0.04 of its total potential returns per unit of risk. Goldman Sachs Group is currently generating about 0.13 per unit of volatility. If you would invest  40,618  in Goldman Sachs Group on January 26, 2024 and sell it today you would earn a total of  1,686  from holding Goldman Sachs Group or generate 4.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

AMTD IDEA Group  vs.  Goldman Sachs Group

AMTD IDEA Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AMTD IDEA Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, AMTD IDEA is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Goldman Sachs Group

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Goldman Sachs unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AMTD IDEA and Goldman Sachs

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

The idea behind AMTD IDEA Group and Goldman Sachs Group 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.