Correlation Between Magic Software and Nextferm Technologies
Can any of the company-specific risk be diversified away by investing in both Magic Software and Nextferm Technologies 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 Nextferm Technologies 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 Nextferm Technologies, you can compare the effects of market volatilities on Magic Software and Nextferm Technologies 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 Nextferm Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and Nextferm Technologies.
Diversification Opportunities for Magic Software and Nextferm Technologies
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Magic and Nextferm is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and Nextferm Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextferm Technologies 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 Nextferm Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextferm Technologies has no effect on the direction of Magic Software i.e., Magic Software and Nextferm Technologies go up and down completely randomly.
Pair Corralation between Magic Software and Nextferm Technologies
Assuming the 90 days trading horizon Magic Software Enterprises is expected to generate 0.21 times more return on investment than Nextferm Technologies. However, Magic Software Enterprises is 4.7 times less risky than Nextferm Technologies. It trades about -0.06 of its potential returns per unit of risk. Nextferm Technologies is currently generating about -0.19 per unit of risk. If you would invest 431,500 in Magic Software Enterprises on August 25, 2024 and sell it today you would lose (20,700) from holding Magic Software Enterprises or give up 4.8% 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. Nextferm Technologies
Performance |
| Timeline |
| Magic Software Enter |
| Nextferm Technologies |
Magic Software and Nextferm Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and Nextferm Technologies
The main advantage of trading using opposite Magic Software and Nextferm Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, Nextferm Technologies 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 Nextferm Technologies will offset losses from the drop in Nextferm Technologies' long position.| Magic Software vs. Sapiens International | Magic Software vs. AudioCodes | Magic Software vs. Matrix | Magic Software vs. Tower Semiconductor |
| Nextferm Technologies vs. Strauss Group | Nextferm Technologies vs. Neto Malinda | Nextferm Technologies vs. Willy Food | Nextferm Technologies vs. Zanlakol |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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