Correlation Between Amadeus IT and TUI AG

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Can any of the company-specific risk be diversified away by investing in both Amadeus IT and TUI AG 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 TUI AG 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 TUI AG, you can compare the effects of market volatilities on Amadeus IT and TUI AG 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 TUI AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amadeus IT and TUI AG.

Diversification Opportunities for Amadeus IT and TUI AG

0.52
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Amadeus and TUI is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Amadeus IT Group and TUI AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TUI 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 Group are associated (or correlated) with TUI AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TUI AG has no effect on the direction of Amadeus IT i.e., Amadeus IT and TUI AG go up and down completely randomly.

Pair Corralation between Amadeus IT and TUI AG

Assuming the 90 days horizon Amadeus IT Group is expected to under-perform the TUI AG. In addition to that, Amadeus IT is 1.16 times more volatile than TUI AG. It trades about -0.11 of its total potential returns per unit of risk. TUI AG is currently generating about -0.05 per unit of volatility. If you would invest  835.00  in TUI AG on August 27, 2024 and sell it today you would lose (30.00) from holding TUI AG or give up 3.59% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Amadeus IT Group  vs.  TUI AG

 Performance 
       Timeline  
Amadeus IT Group 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Amadeus IT Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Amadeus IT is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
TUI AG 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in TUI AG are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, TUI AG reported solid returns over the last few months and may actually be approaching a breakup point.

Amadeus IT and TUI AG Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amadeus IT and TUI AG

The main advantage of trading using opposite Amadeus IT and TUI AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amadeus IT position performs unexpectedly, TUI AG 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 TUI AG will offset losses from the drop in TUI AG's long position.
The idea behind Amadeus IT Group and TUI AG 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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