Correlation Between Amadeus IT and Laboratorio Reig

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

Diversification Opportunities for Amadeus IT and Laboratorio Reig

-0.74

Correlation Coefficient

Amadeus IT  Laboratorio Reig

Pay attention - limited upside

The 3 months correlation between Amadeus and Laboratorio is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Amadeus IT Group and Laboratorio Reig Jofre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laboratorio Reig Jofre 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 Laboratorio Reig. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laboratorio Reig Jofre has no effect on the direction of Amadeus IT i.e., Amadeus IT and Laboratorio Reig go up and down completely randomly.

Pair Corralation between Amadeus IT and Laboratorio Reig

Assuming the 90 days trading horizon Amadeus IT Group is expected to generate 0.61 times more return on investment than Laboratorio Reig. However, Amadeus IT Group is 1.63 times less risky than Laboratorio Reig. It trades about 0.15 of its potential returns per unit of risk. Laboratorio Reig Jofre is currently generating about 0.01 per unit of risk. If you would invest  5,756  in Amadeus IT Group on February 7, 2024 and sell it today you would earn a total of  200.00  from holding Amadeus IT Group or generate 3.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Amadeus IT Group  vs.  Laboratorio Reig Jofre

Amadeus IT Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amadeus IT Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Laboratorio Reig Jofre

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Laboratorio Reig Jofre are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Laboratorio Reig may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Amadeus IT and Laboratorio Reig

The main advantage of trading using opposite Amadeus IT and Laboratorio Reig positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amadeus IT position performs unexpectedly, Laboratorio Reig 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 Laboratorio Reig will offset losses from the drop in Laboratorio Reig's long position.

The idea behind Amadeus IT Group and Laboratorio Reig Jofre 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.