Correlation Between Magic Software and Sofwave Medical
Can any of the company-specific risk be diversified away by investing in both Magic Software and Sofwave Medical 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 Sofwave Medical 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 Sofwave Medical, you can compare the effects of market volatilities on Magic Software and Sofwave Medical 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 Sofwave Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and Sofwave Medical.
Diversification Opportunities for Magic Software and Sofwave Medical
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Magic and Sofwave is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and Sofwave Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sofwave Medical 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 Sofwave Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sofwave Medical has no effect on the direction of Magic Software i.e., Magic Software and Sofwave Medical go up and down completely randomly.
Pair Corralation between Magic Software and Sofwave Medical
Assuming the 90 days trading horizon Magic Software Enterprises is expected to generate 0.68 times more return on investment than Sofwave Medical. However, Magic Software Enterprises is 1.46 times less risky than Sofwave Medical. It trades about -0.05 of its potential returns per unit of risk. Sofwave Medical is currently generating about -0.16 per unit of risk. If you would invest 419,800 in Magic Software Enterprises on August 30, 2024 and sell it today you would lose (11,800) from holding Magic Software Enterprises or give up 2.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Magic Software Enterprises vs. Sofwave Medical
Performance |
| Timeline |
| Magic Software Enter |
| Sofwave Medical |
Magic Software and Sofwave Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and Sofwave Medical
The main advantage of trading using opposite Magic Software and Sofwave Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, Sofwave Medical 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 Sofwave Medical will offset losses from the drop in Sofwave Medical's long position.| Magic Software vs. Matrix | Magic Software vs. Tower Semiconductor | Magic Software vs. B Communications | Magic Software vs. Petrochemical |
| Sofwave Medical vs. Epitomee Medical | Sofwave Medical vs. Bio View | Sofwave Medical vs. Insuline Medical |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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