Correlation Between ECHO INVESTMENT and Amadeus IT

Can any of the company-specific risk be diversified away by investing in both ECHO INVESTMENT 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 ECHO INVESTMENT and Amadeus IT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ECHO INVESTMENT ZY and Amadeus IT Group, you can compare the effects of market volatilities on ECHO INVESTMENT 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 ECHO INVESTMENT with a short position of Amadeus IT. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECHO INVESTMENT and Amadeus IT.

Diversification Opportunities for ECHO INVESTMENT and Amadeus IT

-0.26

Correlation Coefficient

ECHO INVESTMENT  Amadeus IT

Very good diversification

The 3 months correlation between ECHO and Amadeus is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding ECHO INVESTMENT ZY 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 ECHO INVESTMENT 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 ECHO INVESTMENT ZY 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 ECHO INVESTMENT i.e., ECHO INVESTMENT and Amadeus IT go up and down completely randomly.

Pair Corralation between ECHO INVESTMENT and Amadeus IT

Assuming the 90 days horizon ECHO INVESTMENT ZY is expected to under-perform the Amadeus IT. But the stock apears to be less risky and, when comparing its historical volatility, ECHO INVESTMENT ZY is 1.06 times less risky than Amadeus IT. The stock trades about -0.11 of its potential returns per unit of risk. The Amadeus IT Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  6,754  in Amadeus IT Group on December 21, 2024 and sell it today you would earn a total of  538.00  from holding Amadeus IT Group or generate 7.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

ECHO INVESTMENT ZY  vs.  Amadeus IT Group

ECHO INVESTMENT ZY

Risk-Adjusted Performance

Very Weak

Over the last 90 days ECHO INVESTMENT ZY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Amadeus IT Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Amadeus IT Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Amadeus IT may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ECHO INVESTMENT and Amadeus IT

The main advantage of trading using opposite ECHO INVESTMENT and Amadeus IT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECHO INVESTMENT 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.

The idea behind ECHO INVESTMENT ZY and Amadeus IT Group 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.