Correlation Between Ilex Medical and Magic Software
Can any of the company-specific risk be diversified away by investing in both Ilex Medical 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 Ilex Medical and Magic Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ilex Medical and Magic Software Enterprises, you can compare the effects of market volatilities on Ilex Medical 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 Ilex Medical with a short position of Magic Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ilex Medical and Magic Software.
Diversification Opportunities for Ilex Medical and Magic Software
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ilex and Magic is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ilex Medical 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 Ilex Medical 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 Ilex Medical 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 Ilex Medical i.e., Ilex Medical and Magic Software go up and down completely randomly.
Pair Corralation between Ilex Medical and Magic Software
Assuming the 90 days trading horizon Ilex Medical is expected to generate 0.73 times more return on investment than Magic Software. However, Ilex Medical is 1.36 times less risky than Magic Software. It trades about 0.37 of its potential returns per unit of risk. Magic Software Enterprises is currently generating about -0.06 per unit of risk. If you would invest 630,000 in Ilex Medical on August 29, 2024 and sell it today you would earn a total of 82,500 from holding Ilex Medical or generate 13.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ilex Medical vs. Magic Software Enterprises
Performance |
| Timeline |
| Ilex Medical |
| Magic Software Enter |
Ilex Medical and Magic Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ilex Medical and Magic Software
The main advantage of trading using opposite Ilex Medical and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ilex Medical 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.The idea behind Ilex Medical and Magic Software Enterprises pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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