Correlation Between Phibro Animal and AMADEUS IT

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

By analyzing existing cross correlation between Phibro Animal Health and AMADEUS IT GRP, you can compare the effects of market volatilities on Phibro Animal 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 Phibro Animal with a short position of AMADEUS IT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phibro Animal and AMADEUS IT.

Diversification Opportunities for Phibro Animal and AMADEUS IT

-0.09

Correlation Coefficient

Phibro Animal  AMADEUS IT

Good diversification

The 3 months correlation between Phibro and AMADEUS is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Phibro Animal Health and AMADEUS IT GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMADEUS IT GRP and Phibro Animal 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 Phibro Animal Health 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 GRP has no effect on the direction of Phibro Animal i.e., Phibro Animal and AMADEUS IT go up and down completely randomly.

Pair Corralation between Phibro Animal and AMADEUS IT

Assuming the 90 days horizon Phibro Animal Health is expected to generate 2.07 times more return on investment than AMADEUS IT. However, Phibro Animal is 2.07 times more volatile than AMADEUS IT GRP. It trades about 0.09 of its potential returns per unit of risk. AMADEUS IT GRP is currently generating about 0.07 per unit of risk. If you would invest  1,542  in Phibro Animal Health on October 8, 2024 and sell it today you would earn a total of  458.00  from holding Phibro Animal Health or generate 29.7% return on investment over 90 days.

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

Phibro Animal Health  vs.  AMADEUS IT GRP

Phibro Animal Health

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Phibro Animal Health are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Phibro Animal may actually be approaching a critical reversion point that can send shares even higher in February 2025.

AMADEUS IT GRP

Risk-Adjusted Performance

6 of 100

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 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.

Pair Trading with Phibro Animal and AMADEUS IT

The main advantage of trading using opposite Phibro Animal and AMADEUS IT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phibro Animal 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 Phibro Animal Health and AMADEUS IT GRP 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..