Correlation Between AMTD Digital and HeartCore Enterprises

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

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

Diversification Opportunities for AMTD Digital and HeartCore Enterprises

0.27

Correlation Coefficient

AMTD Digital  HeartCore Enterprises

Modest diversification

The 3 months correlation between AMTD and HeartCore is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding AMTD Digital and HeartCore Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HeartCore Enterprises 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 HeartCore Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HeartCore Enterprises has no effect on the direction of AMTD Digital i.e., AMTD Digital and HeartCore Enterprises go up and down completely randomly.

Pair Corralation between AMTD Digital and HeartCore Enterprises

Considering the 90-day investment horizon AMTD Digital is expected to under-perform the HeartCore Enterprises. But the stock apears to be less risky and, when comparing its historical volatility, AMTD Digital is 2.74 times less risky than HeartCore Enterprises. The stock trades about -0.07 of its potential returns per unit of risk. The HeartCore Enterprises is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  169.00  in HeartCore Enterprises on November 28, 2024 and sell it today you would lose (37.00) from holding HeartCore Enterprises or give up 21.89% of portfolio value over 90 days.

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

AMTD Digital  vs.  HeartCore Enterprises

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 March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

HeartCore Enterprises

Risk-Adjusted Performance

Very Weak

Over the last 90 days HeartCore Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, HeartCore Enterprises is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with AMTD Digital and HeartCore Enterprises

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

The idea behind AMTD Digital and HeartCore Enterprises 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.