Correlation Between Expensify and AMTD Digital

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

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

Diversification Opportunities for Expensify and AMTD Digital

0.25

Correlation Coefficient

Expensify  AMTD Digital

Modest diversification

The 3 months correlation between Expensify and AMTD is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Expensify and AMTD Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMTD Digital and Expensify 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 Expensify 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 Expensify i.e., Expensify and AMTD Digital go up and down completely randomly.

Pair Corralation between Expensify and AMTD Digital

Given the investment horizon of 90 days Expensify is expected to under-perform the AMTD Digital. But the stock apears to be less risky and, when comparing its historical volatility, Expensify is 1.05 times less risky than AMTD Digital. The stock trades about -0.13 of its potential returns per unit of risk. The AMTD Digital is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  363.00  in AMTD Digital on March 12, 2024 and sell it today you would lose (7.00) from holding AMTD Digital or give up 1.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Expensify  vs.  AMTD Digital

Expensify

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Expensify has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

AMTD Digital

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Expensify and AMTD Digital

The main advantage of trading using opposite Expensify and AMTD Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Expensify 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 Expensify 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.