Correlation Between CSP and Magic Software
Can any of the company-specific risk be diversified away by investing in both CSP 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 CSP and Magic Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSP Inc and Magic Software Enterprises, you can compare the effects of market volatilities on CSP 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 CSP with a short position of Magic Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSP and Magic Software.
Diversification Opportunities for CSP and Magic Software
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between CSP and Magic is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding CSP Inc 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 CSP 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 CSP Inc 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 CSP i.e., CSP and Magic Software go up and down completely randomly.
Pair Corralation between CSP and Magic Software
Given the investment horizon of 90 days CSP Inc is expected to generate 2.53 times more return on investment than Magic Software. However, CSP is 2.53 times more volatile than Magic Software Enterprises. It trades about 0.27 of its potential returns per unit of risk. Magic Software Enterprises is currently generating about -0.03 per unit of risk. If you would invest 1,311 in CSP Inc on August 26, 2024 and sell it today you would earn a total of 407.00 from holding CSP Inc or generate 31.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CSP Inc vs. Magic Software Enterprises
Performance |
| Timeline |
| CSP Inc |
| Magic Software Enter |
CSP and Magic Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSP and Magic Software
The main advantage of trading using opposite CSP and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSP 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.| CSP vs. The Hackett Group | CSP vs. Nayax | CSP vs. Formula Systems 1985 | CSP vs. Information Services Group |
| Magic Software vs. The Hackett Group | Magic Software vs. CSP Inc | Magic Software vs. Nayax | Magic Software vs. Formula Systems 1985 |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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