Correlation Between China Communications and Amadeus IT
Can any of the company-specific risk be diversified away by investing in both China Communications 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 China Communications and Amadeus IT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Communications Services and Amadeus IT Group, you can compare the effects of market volatilities on China Communications 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 China Communications with a short position of Amadeus IT. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Communications and Amadeus IT.
Diversification Opportunities for China Communications and Amadeus IT
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Amadeus is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding China Communications Services 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 China Communications 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 China Communications Services 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 China Communications i.e., China Communications and Amadeus IT go up and down completely randomly.
Pair Corralation between China Communications and Amadeus IT
Assuming the 90 days horizon China Communications Services is expected to generate 2.05 times more return on investment than Amadeus IT. However, China Communications is 2.05 times more volatile than Amadeus IT Group. It trades about 0.13 of its potential returns per unit of risk. Amadeus IT Group is currently generating about 0.14 per unit of risk. If you would invest 43.00 in China Communications Services on September 12, 2024 and sell it today you would earn a total of 8.00 from holding China Communications Services or generate 18.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.46% |
| Values | Daily Returns |
China Communications Services vs. Amadeus IT Group
Performance |
| Timeline |
| China Communications |
| Amadeus IT Group |
China Communications and Amadeus IT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Communications and Amadeus IT
The main advantage of trading using opposite China Communications and Amadeus IT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Communications 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.| China Communications vs. Superior Plus Corp | China Communications vs. SIVERS SEMICONDUCTORS AB | China Communications vs. Norsk Hydro ASA | China Communications vs. Reliance Steel Aluminum |
| Amadeus IT vs. Goosehead Insurance | Amadeus IT vs. EMBARK EDUCATION LTD | Amadeus IT vs. Grand Canyon Education | Amadeus IT vs. MSAD INSURANCE |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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