Correlation Between EGain and AMTD Digital

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

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

Diversification Opportunities for EGain and AMTD Digital

0.78

Correlation Coefficient

EGain  AMTD Digital

Poor diversification

The 3 months correlation between EGain and AMTD is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding eGain and AMTD Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMTD Digital and EGain 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 eGain 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 EGain i.e., EGain and AMTD Digital go up and down completely randomly.

Pair Corralation between EGain and AMTD Digital

Given the investment horizon of 90 days eGain is expected to under-perform the AMTD Digital. But the stock apears to be less risky and, when comparing its historical volatility, eGain is 1.14 times less risky than AMTD Digital. The stock trades about -0.1 of its potential returns per unit of risk. The AMTD Digital is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  278.00  in AMTD Digital on December 27, 2024 and sell it today you would lose (53.00) from holding AMTD Digital or give up 19.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

eGain  vs.  AMTD Digital

eGain

Risk-Adjusted Performance

Very Weak

Over the last 90 days eGain has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

AMTD Digital

Risk-Adjusted Performance

Very Weak

Over the last 90 days AMTD Digital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward-looking signals remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with EGain and AMTD Digital

The main advantage of trading using opposite EGain and AMTD Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EGain 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 eGain 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.