Correlation Between Magic Software and Arena Star
Can any of the company-specific risk be diversified away by investing in both Magic Software and Arena Star 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 Arena Star 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 Arena Star Group, you can compare the effects of market volatilities on Magic Software and Arena Star 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 Arena Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and Arena Star.
Diversification Opportunities for Magic Software and Arena Star
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Magic and Arena is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and Arena Star Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arena Star Group 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 Arena Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arena Star Group has no effect on the direction of Magic Software i.e., Magic Software and Arena Star go up and down completely randomly.
Pair Corralation between Magic Software and Arena Star
Assuming the 90 days trading horizon Magic Software Enterprises is expected to generate 1.06 times more return on investment than Arena Star. However, Magic Software is 1.06 times more volatile than Arena Star Group. It trades about 0.07 of its potential returns per unit of risk. Arena Star Group is currently generating about 0.03 per unit of risk. If you would invest 322,724 in Magic Software Enterprises on September 14, 2024 and sell it today you would earn a total of 124,676 from holding Magic Software Enterprises or generate 38.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magic Software Enterprises vs. Arena Star Group
Performance |
| Timeline |
| Magic Software Enter |
| Arena Star Group |
Magic Software and Arena Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and Arena Star
The main advantage of trading using opposite Magic Software and Arena Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, Arena Star 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 Arena Star will offset losses from the drop in Arena Star's long position.| Magic Software vs. Matrix | Magic Software vs. Formula | Magic Software vs. Malam Team | Magic Software vs. Computer Direct |
| Arena Star vs. Spuntech | Arena Star vs. Magic Software Enterprises | Arena Star vs. Amanet Management Systems | Arena Star vs. Millennium Food Tech LP |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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