Correlation Between AMTD Digital and PBTS Old

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

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

Diversification Opportunities for AMTD Digital and PBTS Old

0.0

Correlation Coefficient

AMTD Digital  PBTS Old

Pay attention - limited upside

The 3 months correlation between AMTD and PBTS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AMTD Digital and PBTS Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PBTS Old 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 PBTS Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PBTS Old has no effect on the direction of AMTD Digital i.e., AMTD Digital and PBTS Old go up and down completely randomly.

Pair Corralation between AMTD Digital and PBTS Old

Considering the 90-day investment horizon AMTD Digital is expected to under-perform the PBTS Old. But the stock apears to be less risky and, when comparing its historical volatility, AMTD Digital is 19.58 times less risky than PBTS Old. The stock trades about -0.04 of its potential returns per unit of risk. The PBTS Old is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  378.00  in PBTS Old on October 9, 2024 and sell it today you would lose (348.00) from holding PBTS Old or give up 92.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	26.26%
Values	Daily Returns

AMTD Digital  vs.  PBTS Old

AMTD Digital

Risk-Adjusted Performance

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

PBTS Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PBTS Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, PBTS Old is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with AMTD Digital and PBTS Old

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

The idea behind AMTD Digital and PBTS Old 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.