Correlation Between Magic Software and Hoist Finance
Can any of the company-specific risk be diversified away by investing in both Magic Software and Hoist Finance 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 Hoist Finance 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 Hoist Finance AB, you can compare the effects of market volatilities on Magic Software and Hoist Finance 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 Hoist Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and Hoist Finance.
Diversification Opportunities for Magic Software and Hoist Finance
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Magic and Hoist is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and Hoist Finance AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoist Finance AB 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 Hoist Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoist Finance AB has no effect on the direction of Magic Software i.e., Magic Software and Hoist Finance go up and down completely randomly.
Pair Corralation between Magic Software and Hoist Finance
Assuming the 90 days horizon Magic Software Enterprises is expected to generate 0.64 times more return on investment than Hoist Finance. However, Magic Software Enterprises is 1.57 times less risky than Hoist Finance. It trades about -0.01 of its potential returns per unit of risk. Hoist Finance AB is currently generating about -0.12 per unit of risk. If you would invest 1,116 in Magic Software Enterprises on October 15, 2024 and sell it today you would lose (6.00) from holding Magic Software Enterprises or give up 0.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magic Software Enterprises vs. Hoist Finance AB
Performance |
| Timeline |
| Magic Software Enter |
| Hoist Finance AB |
Magic Software and Hoist Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and Hoist Finance
The main advantage of trading using opposite Magic Software and Hoist Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, Hoist Finance 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 Hoist Finance will offset losses from the drop in Hoist Finance's long position.| Magic Software vs. Materialise NV | Magic Software vs. Hyster Yale Materials Handling | Magic Software vs. Compagnie Plastic Omnium | Magic Software vs. Vulcan Materials |
| Hoist Finance vs. 24SEVENOFFICE GROUP AB | Hoist Finance vs. Magic Software Enterprises | Hoist Finance vs. GBS Software AG | Hoist Finance vs. NURAN WIRELESS INC |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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