Correlation Between Ryanair Holdings and AMADEUS IT

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

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

Diversification Opportunities for Ryanair Holdings and AMADEUS IT

0.74

Correlation Coefficient

Ryanair Holdings  AMADEUS IT

Poor diversification

The 3 months correlation between Ryanair and AMADEUS is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings plc and AMADEUS IT HOLD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMADEUS IT HOLD and Ryanair Holdings 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 Ryanair Holdings plc 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 HOLD has no effect on the direction of Ryanair Holdings i.e., Ryanair Holdings and AMADEUS IT go up and down completely randomly.

Pair Corralation between Ryanair Holdings and AMADEUS IT

Assuming the 90 days trading horizon Ryanair Holdings is expected to generate 1.09 times less return on investment than AMADEUS IT. In addition to that, Ryanair Holdings is 1.26 times more volatile than AMADEUS IT HOLD. It trades about 0.07 of its total potential returns per unit of risk. AMADEUS IT HOLD is currently generating about 0.1 per unit of volatility. If you would invest  6,735  in AMADEUS IT HOLD on December 25, 2024 and sell it today you would earn a total of  571.00  from holding AMADEUS IT HOLD or generate 8.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Ryanair Holdings plc  vs.  AMADEUS IT HOLD

Ryanair Holdings plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ryanair Holdings plc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Ryanair Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

AMADEUS IT HOLD

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AMADEUS IT HOLD are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively 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 Ryanair Holdings and AMADEUS IT

The main advantage of trading using opposite Ryanair Holdings and AMADEUS IT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ryanair Holdings 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 Ryanair Holdings plc and AMADEUS IT HOLD 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.