Correlation Between Magic Software and Ilex Medical
Can any of the company-specific risk be diversified away by investing in both Magic Software and Ilex Medical 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 Ilex Medical 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 Ilex Medical, you can compare the effects of market volatilities on Magic Software and Ilex Medical 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 Ilex Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and Ilex Medical.
Diversification Opportunities for Magic Software and Ilex Medical
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magic and Ilex is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and Ilex Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ilex Medical 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 Ilex Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ilex Medical has no effect on the direction of Magic Software i.e., Magic Software and Ilex Medical go up and down completely randomly.
Pair Corralation between Magic Software and Ilex Medical
Assuming the 90 days trading horizon Magic Software Enterprises is expected to under-perform the Ilex Medical. In addition to that, Magic Software is 1.36 times more volatile than Ilex Medical. It trades about -0.06 of its total potential returns per unit of risk. Ilex Medical is currently generating about 0.37 per unit of volatility. 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 |
Magic Software Enterprises vs. Ilex Medical
Performance |
| Timeline |
| Magic Software Enter |
| Ilex Medical |
Magic Software and Ilex Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and Ilex Medical
The main advantage of trading using opposite Magic Software and Ilex Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, Ilex Medical 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 Ilex Medical will offset losses from the drop in Ilex Medical's long position.| 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 CEOs Directory module to screen CEOs from public companies around the world.
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