Correlation Between Booking Holdings and Amadeus IT

Can any of the company-specific risk be diversified away by investing in both Booking 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 Booking 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 Booking Holdings and Amadeus IT Holding, you can compare the effects of market volatilities on Booking 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 Booking Holdings with a short position of Amadeus IT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Booking Holdings and Amadeus IT.

Diversification Opportunities for Booking Holdings and Amadeus IT

0.19

Correlation Coefficient

Booking Holdings  Amadeus IT

Average diversification

The 3 months correlation between Booking and Amadeus is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Booking Holdings and Amadeus IT Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amadeus IT Holding and Booking 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 Booking Holdings 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 Holding has no effect on the direction of Booking Holdings i.e., Booking Holdings and Amadeus IT go up and down completely randomly.

Pair Corralation between Booking Holdings and Amadeus IT

Given the investment horizon of 90 days Booking Holdings is expected to generate 1.15 times more return on investment than Amadeus IT. However, Booking Holdings is 1.15 times more volatile than Amadeus IT Holding. It trades about 0.39 of its potential returns per unit of risk. Amadeus IT Holding is currently generating about 0.07 per unit of risk. If you would invest  380,496  in Booking Holdings on September 3, 2024 and sell it today you would earn a total of  139,702  from holding Booking Holdings or generate 36.72% return on investment over 90 days.

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

Booking Holdings  vs.  Amadeus IT Holding

Booking Holdings

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Booking Holdings are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Booking Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Amadeus IT Holding

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Amadeus IT Holding are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Amadeus IT is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Booking Holdings and Amadeus IT

The main advantage of trading using opposite Booking Holdings and Amadeus IT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Booking 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 Booking Holdings and Amadeus IT Holding 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.