Correlation Between Israel China and Magic Software
Can any of the company-specific risk be diversified away by investing in both Israel China 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 Israel China and Magic Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Israel China Biotechnology and Magic Software Enterprises, you can compare the effects of market volatilities on Israel China 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 Israel China with a short position of Magic Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel China and Magic Software.
Diversification Opportunities for Israel China and Magic Software
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Israel and Magic is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Israel China Biotechnology 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 Israel China 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 Israel China Biotechnology 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 Israel China i.e., Israel China and Magic Software go up and down completely randomly.
Pair Corralation between Israel China and Magic Software
Assuming the 90 days trading horizon Israel China Biotechnology is expected to under-perform the Magic Software. In addition to that, Israel China is 1.37 times more volatile than Magic Software Enterprises. It trades about -0.06 of its total potential returns per unit of risk. Magic Software Enterprises is currently generating about 0.12 per unit of volatility. If you would invest 414,400 in Magic Software Enterprises on September 3, 2024 and sell it today you would earn a total of 23,000 from holding Magic Software Enterprises or generate 5.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Israel China Biotechnology vs. Magic Software Enterprises
Performance |
| Timeline |
| Israel China Biotech |
| Magic Software Enter |
Israel China and Magic Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel China and Magic Software
The main advantage of trading using opposite Israel China and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel China 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.| Israel China vs. G Willi Food International | Israel China vs. TAT Technologies | Israel China vs. Sarine Technologies | Israel China vs. Clal Biotechnology Industries |
| Magic Software vs. Sapiens International | Magic Software vs. AudioCodes | Magic Software vs. Matrix | Magic Software vs. Tower Semiconductor |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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