Correlation Between Information Services and Magic Software
Can any of the company-specific risk be diversified away by investing in both Information Services 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 Information Services and Magic Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Information Services International Dentsu and Magic Software Enterprises, you can compare the effects of market volatilities on Information Services 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 Information Services with a short position of Magic Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Information Services and Magic Software.
Diversification Opportunities for Information Services and Magic Software
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Information and Magic is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Information Services Internati 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 Information Services 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 Information Services International Dentsu 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 Information Services i.e., Information Services and Magic Software go up and down completely randomly.
Pair Corralation between Information Services and Magic Software
Assuming the 90 days horizon Information Services is expected to generate 1.2 times less return on investment than Magic Software. But when comparing it to its historical volatility, Information Services International Dentsu is 1.38 times less risky than Magic Software. It trades about 0.29 of its potential returns per unit of risk. Magic Software Enterprises is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 995.00 in Magic Software Enterprises on September 5, 2024 and sell it today you would earn a total of 175.00 from holding Magic Software Enterprises or generate 17.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Information Services Internati vs. Magic Software Enterprises
Performance |
| Timeline |
| Information Services |
| Magic Software Enter |
Information Services and Magic Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Information Services and Magic Software
The main advantage of trading using opposite Information Services and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Information Services 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.| Information Services vs. SWISS WATER DECAFFCOFFEE | Information Services vs. Japan Tobacco | Information Services vs. Transportadora de Gas | Information Services vs. BJs Restaurants |
| Magic Software vs. Superior Plus Corp | Magic Software vs. NMI Holdings | Magic Software vs. Origin Agritech | Magic Software vs. SIVERS SEMICONDUCTORS AB |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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