Correlation Between AMADEUS IT and USU Software
Can any of the company-specific risk be diversified away by investing in both AMADEUS IT and USU Software 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 USU Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMADEUS IT GRP and USU Software AG, you can compare the effects of market volatilities on AMADEUS IT and USU Software 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 USU Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMADEUS IT and USU Software.
Diversification Opportunities for AMADEUS IT and USU Software
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AMADEUS and USU is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding AMADEUS IT GRP and USU Software AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USU Software AG 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 GRP are associated (or correlated) with USU Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USU Software AG has no effect on the direction of AMADEUS IT i.e., AMADEUS IT and USU Software go up and down completely randomly.
Pair Corralation between AMADEUS IT and USU Software
Assuming the 90 days trading horizon AMADEUS IT is expected to generate 1.51 times less return on investment than USU Software. But when comparing it to its historical volatility, AMADEUS IT GRP is 1.4 times less risky than USU Software. It trades about 0.09 of its potential returns per unit of risk. USU Software AG is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,090 in USU Software AG on September 3, 2024 and sell it today you would earn a total of 120.00 from holding USU Software AG or generate 5.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.67% |
| Values | Daily Returns |
AMADEUS IT GRP vs. USU Software AG
Performance |
| Timeline |
| AMADEUS IT GRP |
| USU Software AG |
AMADEUS IT and USU Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMADEUS IT and USU Software
The main advantage of trading using opposite AMADEUS IT and USU Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMADEUS IT position performs unexpectedly, USU Software 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 USU Software will offset losses from the drop in USU Software's long position.| AMADEUS IT vs. Goosehead Insurance | AMADEUS IT vs. Ping An Insurance | AMADEUS IT vs. Direct Line Insurance | AMADEUS IT vs. Perdoceo Education |
| USU Software vs. International Business Machines | USU Software vs. FUJITSU LTD ADR | USU Software vs. Superior Plus Corp | USU Software vs. NMI 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 Stocks Directory module to find actively traded stocks across global markets.
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