Correlation Between BROADPEAK and Magic Software
Can any of the company-specific risk be diversified away by investing in both BROADPEAK 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 BROADPEAK and Magic Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BROADPEAK SA EO and Magic Software Enterprises, you can compare the effects of market volatilities on BROADPEAK 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 BROADPEAK with a short position of Magic Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of BROADPEAK and Magic Software.
Diversification Opportunities for BROADPEAK and Magic Software
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BROADPEAK and Magic is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding BROADPEAK SA EO 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 BROADPEAK 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 BROADPEAK SA EO 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 BROADPEAK i.e., BROADPEAK and Magic Software go up and down completely randomly.
Pair Corralation between BROADPEAK and Magic Software
Assuming the 90 days horizon BROADPEAK SA EO is expected to under-perform the Magic Software. But the stock apears to be less risky and, when comparing its historical volatility, BROADPEAK SA EO is 1.12 times less risky than Magic Software. The stock trades about -0.13 of its potential returns per unit of risk. The Magic Software Enterprises is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,365 in Magic Software Enterprises on October 30, 2024 and sell it today you would lose (165.00) from holding Magic Software Enterprises or give up 12.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BROADPEAK SA EO vs. Magic Software Enterprises
Performance |
| Timeline |
| BROADPEAK SA EO |
| Magic Software Enter |
BROADPEAK and Magic Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BROADPEAK and Magic Software
The main advantage of trading using opposite BROADPEAK and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BROADPEAK 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.| BROADPEAK vs. CHIBA BANK | BROADPEAK vs. Virtu Financial | BROADPEAK vs. Fevertree Drinks PLC | BROADPEAK vs. Synchrony Financial |
| Magic Software vs. TRADELINK ELECTRON | Magic Software vs. FIRST SHIP LEASE | Magic Software vs. Sixt Leasing SE | Magic Software vs. TRADEDOUBLER AB SK |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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