Correlation Between Exela Technologies and AMTD Digital

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

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

Diversification Opportunities for Exela Technologies and AMTD Digital

0.07

Correlation Coefficient

Exela Technologies  AMTD Digital

Significant diversification

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

Pair Corralation between Exela Technologies and AMTD Digital

Given the investment horizon of 90 days Exela Technologies is expected to under-perform the AMTD Digital. In addition to that, Exela Technologies is 2.54 times more volatile than AMTD Digital. It trades about -0.24 of its total potential returns per unit of risk. AMTD Digital is currently generating about -0.18 per unit of volatility. If you would invest  384.00  in AMTD Digital on September 13, 2024 and sell it today you would lose (98.00) from holding AMTD Digital or give up 25.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	53.49%
Values	Daily Returns

Exela Technologies  vs.  AMTD Digital

Exela Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exela Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

AMTD Digital

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AMTD Digital are ranked lower than 3 (%) 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 Exela Technologies and AMTD Digital

The main advantage of trading using opposite Exela Technologies and AMTD Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exela Technologies 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 Exela Technologies 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.