Correlation Between Magic Software and Millennium Food
Can any of the company-specific risk be diversified away by investing in both Magic Software and Millennium Food 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 Millennium Food 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 Millennium Food Tech LP, you can compare the effects of market volatilities on Magic Software and Millennium Food 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 Millennium Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and Millennium Food.
Diversification Opportunities for Magic Software and Millennium Food
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Magic and Millennium is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and Millennium Food Tech LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millennium Food Tech 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 Millennium Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millennium Food Tech has no effect on the direction of Magic Software i.e., Magic Software and Millennium Food go up and down completely randomly.
Pair Corralation between Magic Software and Millennium Food
Assuming the 90 days trading horizon Magic Software Enterprises is expected to generate 1.22 times more return on investment than Millennium Food. However, Magic Software is 1.22 times more volatile than Millennium Food Tech LP. It trades about 0.0 of its potential returns per unit of risk. Millennium Food Tech LP is currently generating about -0.18 per unit of risk. If you would invest 420,200 in Magic Software Enterprises on August 27, 2024 and sell it today you would lose (1,700) from holding Magic Software Enterprises or give up 0.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magic Software Enterprises vs. Millennium Food Tech LP
Performance |
| Timeline |
| Magic Software Enter |
| Millennium Food Tech |
Magic Software and Millennium Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and Millennium Food
The main advantage of trading using opposite Magic Software and Millennium Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, Millennium Food 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 Millennium Food will offset losses from the drop in Millennium Food's long position.| Magic Software vs. Sapiens International | Magic Software vs. AudioCodes | Magic Software vs. Matrix | Magic Software vs. Tower Semiconductor |
| Millennium Food vs. ICL Israel Chemicals | Millennium Food vs. Iargento Hi Tech | Millennium Food vs. Computer Direct | Millennium Food vs. Bezeq Israeli Telecommunication |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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