Correlation Between Magic Software and TAT Technologies
Can any of the company-specific risk be diversified away by investing in both Magic Software and TAT 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 TAT 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 TAT Technologies, you can compare the effects of market volatilities on Magic Software and TAT 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 TAT Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and TAT Technologies.
Diversification Opportunities for Magic Software and TAT Technologies
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Magic and TAT is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and TAT Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAT 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 TAT Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAT Technologies has no effect on the direction of Magic Software i.e., Magic Software and TAT Technologies go up and down completely randomly.
Pair Corralation between Magic Software and TAT Technologies
Assuming the 90 days trading horizon Magic Software Enterprises is expected to under-perform the TAT Technologies. In addition to that, Magic Software is 1.1 times more volatile than TAT Technologies. It trades about -0.01 of its total potential returns per unit of risk. TAT Technologies is currently generating about 0.17 per unit of volatility. If you would invest 202,700 in TAT Technologies on September 3, 2024 and sell it today you would earn a total of 621,300 from holding TAT Technologies or generate 306.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magic Software Enterprises vs. TAT Technologies
Performance |
| Timeline |
| Magic Software Enter |
| TAT Technologies |
Magic Software and TAT Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and TAT Technologies
The main advantage of trading using opposite Magic Software and TAT Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, TAT 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 TAT Technologies will offset losses from the drop in TAT Technologies' long position.| Magic Software vs. Sapiens International | Magic Software vs. AudioCodes | Magic Software vs. Matrix | Magic Software vs. Tower Semiconductor |
| TAT Technologies vs. Bet Shemesh Engines | TAT Technologies vs. Orbit Technologies | TAT Technologies vs. Tower Semiconductor | TAT Technologies vs. Elron Electronic Industries |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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