Correlation Between Amadeus IT and FUJITSU
Can any of the company-specific risk be diversified away by investing in both Amadeus IT and FUJITSU 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 Amadeus IT and FUJITSU into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amadeus IT Group and FUJITSU LTD ADR, you can compare the effects of market volatilities on Amadeus IT and FUJITSU 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 Amadeus IT with a short position of FUJITSU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amadeus IT and FUJITSU.
Diversification Opportunities for Amadeus IT and FUJITSU
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Amadeus and FUJITSU is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Amadeus IT Group and FUJITSU LTD ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FUJITSU LTD ADR and Amadeus IT 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 Amadeus IT Group are associated (or correlated) with FUJITSU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FUJITSU LTD ADR has no effect on the direction of Amadeus IT i.e., Amadeus IT and FUJITSU go up and down completely randomly.
Pair Corralation between Amadeus IT and FUJITSU
Assuming the 90 days trading horizon Amadeus IT is expected to generate 1.85 times less return on investment than FUJITSU. But when comparing it to its historical volatility, Amadeus IT Group is 1.56 times less risky than FUJITSU. It trades about 0.04 of its potential returns per unit of risk. FUJITSU LTD ADR is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,199 in FUJITSU LTD ADR on December 2, 2024 and sell it today you would earn a total of 631.00 from holding FUJITSU LTD ADR or generate 52.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amadeus IT Group vs. FUJITSU LTD ADR
Performance |
| Timeline |
| Amadeus IT Group |
| FUJITSU LTD ADR |
Amadeus IT and FUJITSU Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amadeus IT and FUJITSU
The main advantage of trading using opposite Amadeus IT and FUJITSU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amadeus IT position performs unexpectedly, FUJITSU 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 FUJITSU will offset losses from the drop in FUJITSU's long position.| Amadeus IT vs. Nomad Foods | Amadeus IT vs. Axfood AB | Amadeus IT vs. COFCO Joycome Foods | Amadeus IT vs. MidCap Financial Investment |
| FUJITSU vs. UNITED INTERNET N | FUJITSU vs. GMO INTERNET | FUJITSU vs. Monument Mining Limited | FUJITSU vs. SmarTone Telecommunications Holdings |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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