Correlation Between Magic Software and Orbit Technologies
Can any of the company-specific risk be diversified away by investing in both Magic Software and Orbit 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 Orbit 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 Orbit Technologies, you can compare the effects of market volatilities on Magic Software and Orbit 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 Orbit Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and Orbit Technologies.
Diversification Opportunities for Magic Software and Orbit Technologies
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Magic and Orbit is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and Orbit Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orbit 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 Orbit Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orbit Technologies has no effect on the direction of Magic Software i.e., Magic Software and Orbit Technologies go up and down completely randomly.
Pair Corralation between Magic Software and Orbit Technologies
Assuming the 90 days trading horizon Magic Software Enterprises is expected to under-perform the Orbit Technologies. In addition to that, Magic Software is 1.28 times more volatile than Orbit Technologies. It trades about -0.06 of its total potential returns per unit of risk. Orbit Technologies is currently generating about 0.3 per unit of volatility. If you would invest 249,300 in Orbit Technologies on August 29, 2024 and sell it today you would earn a total of 26,800 from holding Orbit Technologies or generate 10.75% 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. Orbit Technologies
Performance |
| Timeline |
| Magic Software Enter |
| Orbit Technologies |
Magic Software and Orbit Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and Orbit Technologies
The main advantage of trading using opposite Magic Software and Orbit Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, Orbit 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 Orbit Technologies will offset losses from the drop in Orbit Technologies' long position.| Magic Software vs. Sapiens International | Magic Software vs. AudioCodes | Magic Software vs. Matrix | Magic Software vs. Tower Semiconductor |
| Orbit Technologies vs. Elbit Systems | Orbit Technologies vs. Bet Shemesh Engines | Orbit Technologies vs. Maytronics | Orbit Technologies 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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