Correlation Between Amadeus IT and Trip Group

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

By analyzing existing cross correlation between Amadeus IT Holding and Trip Group Ltd, you can compare the effects of market volatilities on Amadeus IT and Trip Group 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 Trip Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amadeus IT and Trip Group.

Diversification Opportunities for Amadeus IT and Trip Group

-0.35

Correlation Coefficient

Amadeus IT  Trip Group

Very good diversification

The 3 months correlation between Amadeus and Trip is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Amadeus IT Holding and Trip Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trip Group 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 Holding are associated (or correlated) with Trip Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trip Group has no effect on the direction of Amadeus IT i.e., Amadeus IT and Trip Group go up and down completely randomly.

Pair Corralation between Amadeus IT and Trip Group

Assuming the 90 days horizon Amadeus IT Holding is expected to generate 0.5 times more return on investment than Trip Group. However, Amadeus IT Holding is 1.99 times less risky than Trip Group. It trades about 0.15 of its potential returns per unit of risk. Trip Group Ltd is currently generating about -0.01 per unit of risk. If you would invest  7,018  in Amadeus IT Holding on December 29, 2024 and sell it today you would earn a total of  975.00  from holding Amadeus IT Holding or generate 13.89% return on investment over 90 days.

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

Amadeus IT Holding  vs.  Trip Group Ltd

Amadeus IT Holding

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amadeus IT Holding are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Amadeus IT showed solid returns over the last few months and may actually be approaching a breakup point.

Trip Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trip Group Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Trip Group is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Amadeus IT and Trip Group

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

The idea behind Amadeus IT Holding and Trip Group Ltd 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.