Correlation Between Amadeus IT and International Business
Can any of the company-specific risk be diversified away by investing in both Amadeus IT and International Business 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 International Business 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 International Business Machines, you can compare the effects of market volatilities on Amadeus IT and International Business 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 International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amadeus IT and International Business.
Diversification Opportunities for Amadeus IT and International Business
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Amadeus and International is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Amadeus IT Group and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business 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 International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of Amadeus IT i.e., Amadeus IT and International Business go up and down completely randomly.
Pair Corralation between Amadeus IT and International Business
Assuming the 90 days trading horizon Amadeus IT Group is expected to under-perform the International Business. But the stock apears to be less risky and, when comparing its historical volatility, Amadeus IT Group is 1.76 times less risky than International Business. The stock trades about -0.04 of its potential returns per unit of risk. The International Business Machines is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 21,341 in International Business Machines on September 23, 2024 and sell it today you would earn a total of 374.00 from holding International Business Machines or generate 1.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amadeus IT Group vs. International Business Machine
Performance |
| Timeline |
| Amadeus IT Group |
| International Business |
Amadeus IT and International Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amadeus IT and International Business
The main advantage of trading using opposite Amadeus IT and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amadeus IT position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.| Amadeus IT vs. Accenture plc | Amadeus IT vs. International Business Machines | Amadeus IT vs. Infosys Limited | Amadeus IT vs. Cognizant Technology Solutions |
| International Business vs. Accenture plc | International Business vs. Infosys Limited | International Business vs. Cognizant Technology Solutions | International Business vs. AMADEUS IT GRP |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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