Correlation Between FORMPIPE SOFTWARE and MAGIC SOFTWARE
Can any of the company-specific risk be diversified away by investing in both FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE and MAGIC SOFTWARE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FORMPIPE SOFTWARE AB and MAGIC SOFTWARE ENTR, you can compare the effects of market volatilities on FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE with a short position of MAGIC SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of FORMPIPE SOFTWARE and MAGIC SOFTWARE.
Diversification Opportunities for FORMPIPE SOFTWARE and MAGIC SOFTWARE
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between FORMPIPE and MAGIC is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding FORMPIPE SOFTWARE AB 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 FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE AB 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 FORMPIPE SOFTWARE i.e., FORMPIPE SOFTWARE and MAGIC SOFTWARE go up and down completely randomly.
Pair Corralation between FORMPIPE SOFTWARE and MAGIC SOFTWARE
Assuming the 90 days horizon FORMPIPE SOFTWARE AB is expected to generate 0.89 times more return on investment than MAGIC SOFTWARE. However, FORMPIPE SOFTWARE AB is 1.12 times less risky than MAGIC SOFTWARE. It trades about 0.04 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 156.00 in FORMPIPE SOFTWARE AB on August 28, 2024 and sell it today you would earn a total of 56.00 from holding FORMPIPE SOFTWARE AB or generate 35.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FORMPIPE SOFTWARE AB vs. MAGIC SOFTWARE ENTR
Performance |
| Timeline |
| FORMPIPE SOFTWARE |
| MAGIC SOFTWARE ENTR |
FORMPIPE SOFTWARE and MAGIC SOFTWARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FORMPIPE SOFTWARE and MAGIC SOFTWARE
The main advantage of trading using opposite FORMPIPE SOFTWARE and MAGIC SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FORMPIPE SOFTWARE 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.| FORMPIPE SOFTWARE vs. Nemetschek AG ON | FORMPIPE SOFTWARE vs. Superior Plus Corp | FORMPIPE SOFTWARE vs. NMI Holdings | FORMPIPE SOFTWARE vs. Origin Agritech |
| 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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