Correlation Between CompuGroup Medical and Magic Software
Can any of the company-specific risk be diversified away by investing in both CompuGroup Medical 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 CompuGroup Medical and Magic Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CompuGroup Medical SE and Magic Software Enterprises, you can compare the effects of market volatilities on CompuGroup Medical 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 CompuGroup Medical with a short position of Magic Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of CompuGroup Medical and Magic Software.
Diversification Opportunities for CompuGroup Medical and Magic Software
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CompuGroup and Magic is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding CompuGroup Medical SE and Magic Software Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magic Software Enter and CompuGroup Medical 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 CompuGroup Medical SE 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 Enter has no effect on the direction of CompuGroup Medical i.e., CompuGroup Medical and Magic Software go up and down completely randomly.
Pair Corralation between CompuGroup Medical and Magic Software
Assuming the 90 days trading horizon CompuGroup Medical SE is expected to generate 2.82 times more return on investment than Magic Software. However, CompuGroup Medical is 2.82 times more volatile than Magic Software Enterprises. It trades about 0.25 of its potential returns per unit of risk. Magic Software Enterprises is currently generating about 0.19 per unit of risk. If you would invest 1,570 in CompuGroup Medical SE on September 28, 2024 and sell it today you would earn a total of 600.00 from holding CompuGroup Medical SE or generate 38.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CompuGroup Medical SE vs. Magic Software Enterprises
Performance |
| Timeline |
| CompuGroup Medical |
| Magic Software Enter |
CompuGroup Medical and Magic Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CompuGroup Medical and Magic Software
The main advantage of trading using opposite CompuGroup Medical and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CompuGroup Medical 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.| CompuGroup Medical vs. 10X GENOMICS DL | CompuGroup Medical vs. Healthequity | CompuGroup Medical vs. Evolent Health | CompuGroup Medical vs. RLX TECH SPADR1 |
| Magic Software vs. GALENA MINING LTD | Magic Software vs. MCEWEN MINING INC | Magic Software vs. WIZZ AIR HLDGUNSPADR4 | Magic Software vs. GRIFFIN MINING LTD |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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