Correlation Between Adtalem Global and MAGIC SOFTWARE
Can any of the company-specific risk be diversified away by investing in both Adtalem Global 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 Adtalem Global and MAGIC SOFTWARE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adtalem Global Education and MAGIC SOFTWARE ENTR, you can compare the effects of market volatilities on Adtalem Global 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 Adtalem Global with a short position of MAGIC SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adtalem Global and MAGIC SOFTWARE.
Diversification Opportunities for Adtalem Global and MAGIC SOFTWARE
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Adtalem and MAGIC is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Adtalem Global Education 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 Adtalem Global 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 Adtalem Global Education 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 Adtalem Global i.e., Adtalem Global and MAGIC SOFTWARE go up and down completely randomly.
Pair Corralation between Adtalem Global and MAGIC SOFTWARE
Assuming the 90 days trading horizon Adtalem Global Education is expected to generate 0.94 times more return on investment than MAGIC SOFTWARE. However, Adtalem Global Education is 1.06 times less risky than MAGIC SOFTWARE. It trades about 0.15 of its potential returns per unit of risk. MAGIC SOFTWARE ENTR is currently generating about 0.06 per unit of risk. If you would invest 4,660 in Adtalem Global Education on November 7, 2024 and sell it today you would earn a total of 5,540 from holding Adtalem Global Education or generate 118.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adtalem Global Education vs. MAGIC SOFTWARE ENTR
Performance |
| Timeline |
| Adtalem Global Education |
| MAGIC SOFTWARE ENTR |
Adtalem Global and MAGIC SOFTWARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adtalem Global and MAGIC SOFTWARE
The main advantage of trading using opposite Adtalem Global and MAGIC SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adtalem Global 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.| Adtalem Global vs. PLAYTECH | Adtalem Global vs. BROADPEAK SA EO | Adtalem Global vs. Air Transport Services | Adtalem Global vs. PLAY2CHILL SA ZY |
| MAGIC SOFTWARE vs. Gol Intelligent Airlines | MAGIC SOFTWARE vs. Agilent Technologies | MAGIC SOFTWARE vs. ASPEN TECHINC DL | MAGIC SOFTWARE vs. THORNEY TECHS 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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