Correlation Between Amadeus IT and Datametrex

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

Diversification Opportunities for Amadeus IT and Datametrex

0.19

Correlation Coefficient

Amadeus IT  Datametrex

Average diversification

The 3 months correlation between Amadeus and Datametrex is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Amadeus IT Group and Datametrex AI Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datametrex AI Limited 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 Datametrex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datametrex AI Limited has no effect on the direction of Amadeus IT i.e., Amadeus IT and Datametrex go up and down completely randomly.

Pair Corralation between Amadeus IT and Datametrex

Assuming the 90 days trading horizon Amadeus IT is expected to generate 2649.75 times less return on investment than Datametrex. But when comparing it to its historical volatility, Amadeus IT Group is 135.44 times less risky than Datametrex. It trades about 0.02 of its potential returns per unit of risk. Datametrex AI Limited is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  0.26  in Datametrex AI Limited on September 23, 2024 and sell it today you would earn a total of  0.24  from holding Datametrex AI Limited or generate 92.31% return on investment over 90 days.

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

Amadeus IT Group  vs.  Datametrex AI Limited

Amadeus IT Group

Risk-Adjusted Performance

2 of 100

Weak

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 basic indicators, Amadeus IT is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Datametrex AI Limited

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Datametrex AI Limited are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Datametrex reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amadeus IT and Datametrex

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

The idea behind Amadeus IT Group and Datametrex AI Limited 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.