Correlation Between Magic Software and Global Ship
Can any of the company-specific risk be diversified away by investing in both Magic Software and Global Ship 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 Global Ship 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 Global Ship Lease, you can compare the effects of market volatilities on Magic Software and Global Ship 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 Global Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and Global Ship.
Diversification Opportunities for Magic Software and Global Ship
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Magic and Global is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship Lease 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 Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of Magic Software i.e., Magic Software and Global Ship go up and down completely randomly.
Pair Corralation between Magic Software and Global Ship
Assuming the 90 days horizon Magic Software is expected to generate 17.67 times less return on investment than Global Ship. In addition to that, Magic Software is 1.62 times more volatile than Global Ship Lease. It trades about 0.0 of its total potential returns per unit of risk. Global Ship Lease is currently generating about 0.05 per unit of volatility. If you would invest 1,399 in Global Ship Lease on September 3, 2024 and sell it today you would earn a total of 633.00 from holding Global Ship Lease or generate 45.25% 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. Global Ship Lease
Performance |
| Timeline |
| Magic Software Enter |
| Global Ship Lease |
Magic Software and Global Ship Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and Global Ship
The main advantage of trading using opposite Magic Software and Global Ship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, Global Ship 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 Global Ship will offset losses from the drop in Global Ship's long position.| Magic Software vs. Superior Plus Corp | Magic Software vs. NMI Holdings | Magic Software vs. Origin Agritech | Magic Software vs. SIVERS SEMICONDUCTORS AB |
| Global Ship vs. BW LPG Limited | Global Ship vs. Wilh Wilhelmsen Holding | Global Ship vs. Superior Plus Corp | Global Ship vs. NMI Holdings |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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