Correlation Between AMADEUS IT and Vulcan Materials

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

By analyzing existing cross correlation between AMADEUS IT GRP and Vulcan Materials, you can compare the effects of market volatilities on AMADEUS IT and Vulcan Materials 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 Vulcan Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMADEUS IT and Vulcan Materials.

Diversification Opportunities for AMADEUS IT and Vulcan Materials

-0.49

Correlation Coefficient

AMADEUS IT  Vulcan Materials

Very good diversification

The 3 months correlation between AMADEUS and Vulcan is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding AMADEUS IT GRP and Vulcan Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials 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 GRP are associated (or correlated) with Vulcan Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Materials has no effect on the direction of AMADEUS IT i.e., AMADEUS IT and Vulcan Materials go up and down completely randomly.

Pair Corralation between AMADEUS IT and Vulcan Materials

Assuming the 90 days trading horizon AMADEUS IT GRP is expected to generate 1.08 times more return on investment than Vulcan Materials. However, AMADEUS IT is 1.08 times more volatile than Vulcan Materials. It trades about 0.08 of its potential returns per unit of risk. Vulcan Materials is currently generating about -0.13 per unit of risk. If you would invest  6,697  in AMADEUS IT GRP on December 29, 2024 and sell it today you would earn a total of  603.00  from holding AMADEUS IT GRP or generate 9.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

AMADEUS IT GRP  vs.  Vulcan Materials

AMADEUS IT GRP

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AMADEUS IT GRP 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.

Vulcan Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vulcan Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with AMADEUS IT and Vulcan Materials

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

The idea behind AMADEUS IT GRP and Vulcan Materials 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.