Correlation Between COVIVIO HOTELS and MAGIC SOFTWARE
Can any of the company-specific risk be diversified away by investing in both COVIVIO HOTELS and MAGIC SOFTWARE 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 COVIVIO HOTELS and MAGIC SOFTWARE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COVIVIO HOTELS INH and MAGIC SOFTWARE ENTR, you can compare the effects of market volatilities on COVIVIO HOTELS and MAGIC SOFTWARE 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 COVIVIO HOTELS with a short position of MAGIC SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of COVIVIO HOTELS and MAGIC SOFTWARE.
Diversification Opportunities for COVIVIO HOTELS and MAGIC SOFTWARE
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between COVIVIO and MAGIC is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding COVIVIO HOTELS INH and MAGIC SOFTWARE ENTR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAGIC SOFTWARE ENTR and COVIVIO HOTELS 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 COVIVIO HOTELS INH are associated (or correlated) with MAGIC SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAGIC SOFTWARE ENTR has no effect on the direction of COVIVIO HOTELS i.e., COVIVIO HOTELS and MAGIC SOFTWARE go up and down completely randomly.
Pair Corralation between COVIVIO HOTELS and MAGIC SOFTWARE
Assuming the 90 days horizon COVIVIO HOTELS INH is expected to generate 0.53 times more return on investment than MAGIC SOFTWARE. However, COVIVIO HOTELS INH is 1.87 times less risky than MAGIC SOFTWARE. It trades about 0.05 of its potential returns per unit of risk. MAGIC SOFTWARE ENTR is currently generating about -0.01 per unit of risk. If you would invest 1,306 in COVIVIO HOTELS INH on August 28, 2024 and sell it today you would earn a total of 514.00 from holding COVIVIO HOTELS INH or generate 39.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
COVIVIO HOTELS INH vs. MAGIC SOFTWARE ENTR
Performance |
| Timeline |
| COVIVIO HOTELS INH |
| MAGIC SOFTWARE ENTR |
COVIVIO HOTELS and MAGIC SOFTWARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COVIVIO HOTELS and MAGIC SOFTWARE
The main advantage of trading using opposite COVIVIO HOTELS and MAGIC SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COVIVIO HOTELS position performs unexpectedly, MAGIC SOFTWARE 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 MAGIC SOFTWARE will offset losses from the drop in MAGIC SOFTWARE's long position.| COVIVIO HOTELS vs. PARKEN Sport Entertainment | COVIVIO HOTELS vs. IDP EDUCATION LTD | COVIVIO HOTELS vs. Xinhua Winshare Publishing | COVIVIO HOTELS vs. DeVry Education Group |
| MAGIC SOFTWARE vs. Apple Inc | MAGIC SOFTWARE vs. Apple Inc | MAGIC SOFTWARE vs. Apple Inc | MAGIC SOFTWARE vs. Microsoft |
Check out your portfolio center.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 Transaction History module to view history of all your transactions and understand their impact on performance.
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