Correlation Between AMTD Digital and Rumble

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

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

Diversification Opportunities for AMTD Digital and Rumble

0.75

Correlation Coefficient

AMTD Digital  Rumble

Poor diversification

The 3 months correlation between AMTD and Rumble is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding AMTD Digital and Rumble Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rumble Inc 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 Rumble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rumble Inc has no effect on the direction of AMTD Digital i.e., AMTD Digital and Rumble go up and down completely randomly.

Pair Corralation between AMTD Digital and Rumble

Considering the 90-day investment horizon AMTD Digital is expected to generate 0.8 times more return on investment than Rumble. However, AMTD Digital is 1.25 times less risky than Rumble. It trades about -0.07 of its potential returns per unit of risk. Rumble Inc is currently generating about -0.2 per unit of risk. 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	100.0%
Values	Daily Returns

AMTD Digital  vs.  Rumble Inc

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.

Rumble Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rumble Inc 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 April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with AMTD Digital and Rumble

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

The idea behind AMTD Digital and Rumble Inc 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.