Correlation Between Magic Software and Rimon Consulting
Can any of the company-specific risk be diversified away by investing in both Magic Software and Rimon Consulting 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 Rimon Consulting 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 Rimon Consulting Management, you can compare the effects of market volatilities on Magic Software and Rimon Consulting 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 Rimon Consulting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and Rimon Consulting.
Diversification Opportunities for Magic Software and Rimon Consulting
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Magic and Rimon is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and Rimon Consulting Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rimon Consulting Man 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 Rimon Consulting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rimon Consulting Man has no effect on the direction of Magic Software i.e., Magic Software and Rimon Consulting go up and down completely randomly.
Pair Corralation between Magic Software and Rimon Consulting
Assuming the 90 days trading horizon Magic Software Enterprises is expected to under-perform the Rimon Consulting. In addition to that, Magic Software is 1.0 times more volatile than Rimon Consulting Management. It trades about -0.12 of its total potential returns per unit of risk. Rimon Consulting Management is currently generating about 0.42 per unit of volatility. If you would invest 345,200 in Rimon Consulting Management on August 29, 2024 and sell it today you would earn a total of 104,400 from holding Rimon Consulting Management or generate 30.24% 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. Rimon Consulting Management
Performance |
| Timeline |
| Magic Software Enter |
| Rimon Consulting Man |
Magic Software and Rimon Consulting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and Rimon Consulting
The main advantage of trading using opposite Magic Software and Rimon Consulting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, Rimon Consulting 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 Rimon Consulting will offset losses from the drop in Rimon Consulting's long position.| Magic Software vs. Matrix | Magic Software vs. Tower Semiconductor | Magic Software vs. B Communications | Magic Software vs. Petrochemical |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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