Correlation Between HeartCore Enterprises and AMTD Digital

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

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

Diversification Opportunities for HeartCore Enterprises and AMTD Digital

-0.07

Correlation Coefficient

HeartCore Enterprises  AMTD Digital

Good diversification

The 3 months correlation between HeartCore and AMTD is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding HeartCore Enterprises and AMTD Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMTD Digital and HeartCore Enterprises 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 HeartCore Enterprises 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 HeartCore Enterprises i.e., HeartCore Enterprises and AMTD Digital go up and down completely randomly.

Pair Corralation between HeartCore Enterprises and AMTD Digital

Given the investment horizon of 90 days HeartCore Enterprises is expected to generate 0.92 times more return on investment than AMTD Digital. However, HeartCore Enterprises is 1.09 times less risky than AMTD Digital. It trades about 0.25 of its potential returns per unit of risk. AMTD Digital is currently generating about 0.05 per unit of risk. If you would invest  66.00  in HeartCore Enterprises on September 2, 2024 and sell it today you would earn a total of  103.00  from holding HeartCore Enterprises or generate 156.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

HeartCore Enterprises  vs.  AMTD Digital

HeartCore Enterprises

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HeartCore Enterprises are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting fundamental indicators, HeartCore Enterprises reported solid returns over the last few months and may actually be approaching a breakup point.

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 unsteady forward-looking signals, AMTD Digital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HeartCore Enterprises and AMTD Digital

The main advantage of trading using opposite HeartCore Enterprises and AMTD Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HeartCore Enterprises 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 HeartCore Enterprises 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.

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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.