Correlation Between Magic Software and Payment Financial
Can any of the company-specific risk be diversified away by investing in both Magic Software and Payment Financial 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 Payment Financial 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 Payment Financial Technologies, you can compare the effects of market volatilities on Magic Software and Payment Financial 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 Payment Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and Payment Financial.
Diversification Opportunities for Magic Software and Payment Financial
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Magic and Payment is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and Payment Financial Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payment Financial 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 Payment Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payment Financial has no effect on the direction of Magic Software i.e., Magic Software and Payment Financial go up and down completely randomly.
Pair Corralation between Magic Software and Payment Financial
Assuming the 90 days trading horizon Magic Software Enterprises is expected to under-perform the Payment Financial. But the stock apears to be less risky and, when comparing its historical volatility, Magic Software Enterprises is 1.3 times less risky than Payment Financial. The stock trades about -0.02 of its potential returns per unit of risk. The Payment Financial Technologies is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 32,955 in Payment Financial Technologies on August 25, 2024 and sell it today you would earn a total of 175.00 from holding Payment Financial Technologies or generate 0.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magic Software Enterprises vs. Payment Financial Technologies
Performance |
| Timeline |
| Magic Software Enter |
| Payment Financial |
Magic Software and Payment Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and Payment Financial
The main advantage of trading using opposite Magic Software and Payment Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, Payment Financial 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 Payment Financial will offset losses from the drop in Payment Financial's long position.| Magic Software vs. Sapiens International | Magic Software vs. AudioCodes | Magic Software vs. Matrix | Magic Software vs. Tower Semiconductor |
| Payment Financial vs. Spuntech | Payment Financial vs. Ilex Medical | Payment Financial vs. Imed Infinity Medical Limited | Payment Financial vs. Magic Software Enterprises |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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