Correlation Between Amdocs and CiT

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

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

Diversification Opportunities for Amdocs and CiT

0.75

Correlation Coefficient

Amdocs  CiT

Poor diversification

The 3 months correlation between Amdocs and CiT is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Amdocs and CiT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CiT Inc and Amdocs 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 Amdocs are associated (or correlated) with CiT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CiT Inc has no effect on the direction of Amdocs i.e., Amdocs and CiT go up and down completely randomly.

Pair Corralation between Amdocs and CiT

Considering the 90-day investment horizon Amdocs is expected to generate 2.01 times less return on investment than CiT. But when comparing it to its historical volatility, Amdocs is 2.52 times less risky than CiT. It trades about 0.07 of its potential returns per unit of risk. CiT Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  516.00  in CiT Inc on April 23, 2025 and sell it today you would earn a total of  36.00  from holding CiT Inc or generate 6.98% return on investment over 90 days.

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

Amdocs  vs.  CiT Inc

Amdocs

Risk-Adjusted Performance

Modest

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

CiT Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CiT Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CiT may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Amdocs and CiT

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

The idea behind Amdocs and CiT Inc 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.