Correlation Between EMBARK EDUCATION and Amadeus IT
Can any of the company-specific risk be diversified away by investing in both EMBARK EDUCATION and Amadeus IT 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 EMBARK EDUCATION and Amadeus IT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMBARK EDUCATION LTD and Amadeus IT Group, you can compare the effects of market volatilities on EMBARK EDUCATION and Amadeus IT 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 EMBARK EDUCATION with a short position of Amadeus IT. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMBARK EDUCATION and Amadeus IT.
Diversification Opportunities for EMBARK EDUCATION and Amadeus IT
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EMBARK and Amadeus is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding EMBARK EDUCATION LTD and Amadeus IT Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amadeus IT Group and EMBARK EDUCATION 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 EMBARK EDUCATION LTD are associated (or correlated) with Amadeus IT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amadeus IT Group has no effect on the direction of EMBARK EDUCATION i.e., EMBARK EDUCATION and Amadeus IT go up and down completely randomly.
Pair Corralation between EMBARK EDUCATION and Amadeus IT
Assuming the 90 days horizon EMBARK EDUCATION is expected to generate 1.06 times less return on investment than Amadeus IT. But when comparing it to its historical volatility, EMBARK EDUCATION LTD is 1.43 times less risky than Amadeus IT. It trades about 0.22 of its potential returns per unit of risk. Amadeus IT Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 6,646 in Amadeus IT Group on September 14, 2024 and sell it today you would earn a total of 254.00 from holding Amadeus IT Group or generate 3.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
EMBARK EDUCATION LTD vs. Amadeus IT Group
Performance |
| Timeline |
| EMBARK EDUCATION LTD |
| Amadeus IT Group |
EMBARK EDUCATION and Amadeus IT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMBARK EDUCATION and Amadeus IT
The main advantage of trading using opposite EMBARK EDUCATION and Amadeus IT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMBARK EDUCATION position performs unexpectedly, Amadeus IT 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 Amadeus IT will offset losses from the drop in Amadeus IT's long position.| EMBARK EDUCATION vs. IDP EDUCATION LTD | EMBARK EDUCATION vs. Strategic Education | EMBARK EDUCATION vs. Laureate Education | EMBARK EDUCATION vs. Superior Plus Corp |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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