Correlation Between Magic Software and Priortech
Can any of the company-specific risk be diversified away by investing in both Magic Software and Priortech 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 Priortech 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 Priortech, you can compare the effects of market volatilities on Magic Software and Priortech 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 Priortech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and Priortech.
Diversification Opportunities for Magic Software and Priortech
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Magic and Priortech is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and Priortech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Priortech 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 Priortech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Priortech has no effect on the direction of Magic Software i.e., Magic Software and Priortech go up and down completely randomly.
Pair Corralation between Magic Software and Priortech
Assuming the 90 days trading horizon Magic Software is expected to generate 25.74 times less return on investment than Priortech. But when comparing it to its historical volatility, Magic Software Enterprises is 1.38 times less risky than Priortech. It trades about 0.0 of its potential returns per unit of risk. Priortech is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,760,000 in Priortech on November 27, 2024 and sell it today you would earn a total of 9,000 from holding Priortech or generate 0.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magic Software Enterprises vs. Priortech
Performance |
| Timeline |
| Magic Software Enter |
| Priortech |
Magic Software and Priortech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and Priortech
The main advantage of trading using opposite Magic Software and Priortech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, Priortech 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 Priortech will offset losses from the drop in Priortech'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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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