Correlation Between AMTD Digital and Grab Holdings

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

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

Diversification Opportunities for AMTD Digital and Grab Holdings

-0.36

Correlation Coefficient

AMTD Digital  Grab Holdings

Very good diversification

The 3 months correlation between AMTD and Grab is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding AMTD Digital and Grab Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grab Holdings 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 Grab Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grab Holdings has no effect on the direction of AMTD Digital i.e., AMTD Digital and Grab Holdings go up and down completely randomly.

Pair Corralation between AMTD Digital and Grab Holdings

Considering the 90-day investment horizon AMTD Digital is expected to generate 2.12 times less return on investment than Grab Holdings. In addition to that, AMTD Digital is 2.51 times more volatile than Grab Holdings. It trades about 0.05 of its total potential returns per unit of risk. Grab Holdings is currently generating about 0.25 per unit of volatility. If you would invest  347.00  in Grab Holdings on September 13, 2024 and sell it today you would earn a total of  196.00  from holding Grab Holdings or generate 56.48% return on investment over 90 days.

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

AMTD Digital  vs.  Grab Holdings

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.

Grab Holdings

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Grab Holdings are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Grab Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AMTD Digital and Grab Holdings

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

The idea behind AMTD Digital and Grab Holdings 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.