Correlation Between Reinsurance Group and AMADEUS IT

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

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

Diversification Opportunities for Reinsurance Group and AMADEUS IT

0.55

Correlation Coefficient

Reinsurance Group  AMADEUS IT

Very weak diversification

The 3 months correlation between Reinsurance and AMADEUS is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Reinsurance Group of 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 Reinsurance Group 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 Reinsurance Group of 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 Reinsurance Group i.e., Reinsurance Group and AMADEUS IT go up and down completely randomly.

Pair Corralation between Reinsurance Group and AMADEUS IT

Assuming the 90 days trading horizon Reinsurance Group is expected to generate 1.03 times less return on investment than AMADEUS IT. In addition to that, Reinsurance Group is 1.21 times more volatile than AMADEUS IT GRP. It trades about 0.02 of its total potential returns per unit of risk. AMADEUS IT GRP is currently generating about 0.03 per unit of volatility. If you would invest  6,765  in AMADEUS IT GRP on April 24, 2025 and sell it today you would earn a total of  135.00  from holding AMADEUS IT GRP or generate 2.0% return on investment over 90 days.

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

Reinsurance Group of  vs.  AMADEUS IT GRP

Reinsurance Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Reinsurance Group of are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Reinsurance Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

AMADEUS IT GRP

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AMADEUS IT GRP are ranked lower than 2 (%) 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 Reinsurance Group and AMADEUS IT

The main advantage of trading using opposite Reinsurance Group and AMADEUS IT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reinsurance Group 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 Reinsurance Group of 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..