Correlation Between Magic Software and Alrov Properties
Can any of the company-specific risk be diversified away by investing in both Magic Software and Alrov Properties 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 Magic Software and Alrov Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magic Software Enterprises and Alrov Properties Lodgings, you can compare the effects of market volatilities on Magic Software and Alrov Properties 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 Magic Software with a short position of Alrov Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and Alrov Properties.
Diversification Opportunities for Magic Software and Alrov Properties
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Magic and Alrov is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and Alrov Properties Lodgings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alrov Properties Lodgings and Magic Software 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 Magic Software Enterprises are associated (or correlated) with Alrov Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alrov Properties Lodgings has no effect on the direction of Magic Software i.e., Magic Software and Alrov Properties go up and down completely randomly.
Pair Corralation between Magic Software and Alrov Properties
Assuming the 90 days trading horizon Magic Software is expected to generate 1.8 times less return on investment than Alrov Properties. In addition to that, Magic Software is 1.39 times more volatile than Alrov Properties Lodgings. It trades about 0.03 of its total potential returns per unit of risk. Alrov Properties Lodgings is currently generating about 0.07 per unit of volatility. If you would invest 1,213,000 in Alrov Properties Lodgings on September 1, 2024 and sell it today you would earn a total of 354,000 from holding Alrov Properties Lodgings or generate 29.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magic Software Enterprises vs. Alrov Properties Lodgings
Performance |
| Timeline |
| Magic Software Enter |
| Alrov Properties Lodgings |
Magic Software and Alrov Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and Alrov Properties
The main advantage of trading using opposite Magic Software and Alrov Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, Alrov Properties 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 Alrov Properties will offset losses from the drop in Alrov Properties' long position.| Magic Software vs. Sapiens International | Magic Software vs. Matrix | Magic Software vs. Tower Semiconductor | Magic Software vs. Nova |
| Alrov Properties vs. Melisron | Alrov Properties vs. Fattal 1998 Holdings | Alrov Properties vs. Azrieli Group | Alrov Properties vs. Clal Insurance Enterprises |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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