Correlation Between Alfa Financial and MAGIC SOFTWARE
Can any of the company-specific risk be diversified away by investing in both Alfa Financial 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 Alfa Financial and MAGIC SOFTWARE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alfa Financial Software and MAGIC SOFTWARE ENTR, you can compare the effects of market volatilities on Alfa Financial 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 Alfa Financial with a short position of MAGIC SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Financial and MAGIC SOFTWARE.
Diversification Opportunities for Alfa Financial and MAGIC SOFTWARE
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alfa and MAGIC is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software 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 Alfa Financial 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 Alfa Financial Software 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 Alfa Financial i.e., Alfa Financial and MAGIC SOFTWARE go up and down completely randomly.
Pair Corralation between Alfa Financial and MAGIC SOFTWARE
Assuming the 90 days trading horizon Alfa Financial Software is expected to generate 0.84 times more return on investment than MAGIC SOFTWARE. However, Alfa Financial Software is 1.19 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 169.00 in Alfa Financial Software on August 24, 2024 and sell it today you would earn a total of 99.00 from holding Alfa Financial Software or generate 58.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alfa Financial Software vs. MAGIC SOFTWARE ENTR
Performance |
| Timeline |
| Alfa Financial Software |
| MAGIC SOFTWARE ENTR |
Alfa Financial and MAGIC SOFTWARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfa Financial and MAGIC SOFTWARE
The main advantage of trading using opposite Alfa Financial and MAGIC SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Financial 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.| Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc |
| MAGIC SOFTWARE vs. Apple Inc | MAGIC SOFTWARE vs. Apple Inc | MAGIC SOFTWARE vs. Apple Inc | MAGIC SOFTWARE vs. Apple Inc |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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