Correlation Between MoneyLion and AMTD Digital

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

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

Diversification Opportunities for MoneyLion and AMTD Digital

-0.35

Correlation Coefficient

MoneyLion  AMTD Digital

Very good diversification

The 3 months correlation between MoneyLion and AMTD is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding MoneyLion and AMTD Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMTD Digital and MoneyLion 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 MoneyLion 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 MoneyLion i.e., MoneyLion and AMTD Digital go up and down completely randomly.

Pair Corralation between MoneyLion and AMTD Digital

Allowing for the 90-day total investment horizon MoneyLion is expected to generate 0.76 times more return on investment than AMTD Digital. However, MoneyLion is 1.32 times less risky than AMTD Digital. It trades about 0.2 of its potential returns per unit of risk. AMTD Digital is currently generating about 0.04 per unit of risk. If you would invest  4,642  in MoneyLion on August 30, 2024 and sell it today you would earn a total of  4,014  from holding MoneyLion or generate 86.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

MoneyLion  vs.  AMTD Digital

MoneyLion

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MoneyLion are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent essential indicators, MoneyLion disclosed solid returns over the last few months and may actually be approaching a breakup point.

AMTD Digital

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AMTD Digital are ranked lower than 2 (%) 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.

Pair Trading with MoneyLion and AMTD Digital

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

Check out your portfolio center.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.