Correlation Between HomeToGo and Magic Software
Can any of the company-specific risk be diversified away by investing in both HomeToGo 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 HomeToGo and Magic Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HomeToGo SE and Magic Software Enterprises, you can compare the effects of market volatilities on HomeToGo 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 HomeToGo with a short position of Magic Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of HomeToGo and Magic Software.
Diversification Opportunities for HomeToGo and Magic Software
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HomeToGo and Magic is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding HomeToGo 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 HomeToGo 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 HomeToGo 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 HomeToGo i.e., HomeToGo and Magic Software go up and down completely randomly.
Pair Corralation between HomeToGo and Magic Software
Assuming the 90 days trading horizon HomeToGo is expected to generate 1.47 times less return on investment than Magic Software. In addition to that, HomeToGo is 1.03 times more volatile than Magic Software Enterprises. It trades about 0.04 of its total potential returns per unit of risk. Magic Software Enterprises is currently generating about 0.06 per unit of volatility. If you would invest 928.00 in Magic Software Enterprises on September 1, 2024 and sell it today you would earn a total of 172.00 from holding Magic Software Enterprises or generate 18.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HomeToGo SE vs. Magic Software Enterprises
Performance |
| Timeline |
| HomeToGo SE |
| Magic Software Enter |
HomeToGo and Magic Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HomeToGo and Magic Software
The main advantage of trading using opposite HomeToGo and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HomeToGo 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.| HomeToGo vs. Alphabet Class A | HomeToGo vs. Alphabet Class A | HomeToGo vs. Meta Platforms | HomeToGo vs. Tencent Holdings |
| Magic Software vs. Synopsys | Magic Software vs. Superior Plus Corp | Magic Software vs. NMI Holdings | Magic Software vs. Origin Agritech |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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