Correlation Between AMTD Digital and Cosmos Health

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

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

Diversification Opportunities for AMTD Digital and Cosmos Health

-0.38

Correlation Coefficient

AMTD Digital  Cosmos Health

Very good diversification

The 3 months correlation between AMTD and Cosmos is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding AMTD Digital and Cosmos Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cosmos Health 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 Cosmos Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cosmos Health has no effect on the direction of AMTD Digital i.e., AMTD Digital and Cosmos Health go up and down completely randomly.

Pair Corralation between AMTD Digital and Cosmos Health

Considering the 90-day investment horizon AMTD Digital is expected to under-perform the Cosmos Health. But the stock apears to be less risky and, when comparing its historical volatility, AMTD Digital is 1.46 times less risky than Cosmos Health. The stock trades about -0.04 of its potential returns per unit of risk. The Cosmos Health is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  76.00  in Cosmos Health on September 1, 2024 and sell it today you would earn a total of  4.00  from holding Cosmos Health or generate 5.26% 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.  Cosmos Health

AMTD Digital

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AMTD Digital are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward-looking signals, AMTD Digital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Cosmos Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cosmos Health 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 basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with AMTD Digital and Cosmos Health

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

The idea behind AMTD Digital and Cosmos Health 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.