Correlation Between Magic Software and PARKEN Sport
Can any of the company-specific risk be diversified away by investing in both Magic Software and PARKEN Sport 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 PARKEN Sport 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 PARKEN Sport Entertainment, you can compare the effects of market volatilities on Magic Software and PARKEN Sport 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 PARKEN Sport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and PARKEN Sport.
Diversification Opportunities for Magic Software and PARKEN Sport
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Magic and PARKEN is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and PARKEN Sport Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PARKEN Sport Enterta 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 PARKEN Sport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PARKEN Sport Enterta has no effect on the direction of Magic Software i.e., Magic Software and PARKEN Sport go up and down completely randomly.
Pair Corralation between Magic Software and PARKEN Sport
Assuming the 90 days horizon Magic Software Enterprises is expected to under-perform the PARKEN Sport. But the stock apears to be less risky and, when comparing its historical volatility, Magic Software Enterprises is 1.93 times less risky than PARKEN Sport. The stock trades about -0.01 of its potential returns per unit of risk. The PARKEN Sport Entertainment is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,745 in PARKEN Sport Entertainment on October 17, 2024 and sell it today you would earn a total of 70.00 from holding PARKEN Sport Entertainment or generate 4.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magic Software Enterprises vs. PARKEN Sport Entertainment
Performance |
| Timeline |
| Magic Software Enter |
| PARKEN Sport Enterta |
Magic Software and PARKEN Sport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and PARKEN Sport
The main advantage of trading using opposite Magic Software and PARKEN Sport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, PARKEN Sport 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 PARKEN Sport will offset losses from the drop in PARKEN Sport's long position.| Magic Software vs. PLAYMATES TOYS | Magic Software vs. LG Display Co | Magic Software vs. Grand Canyon Education | Magic Software vs. Perdoceo Education |
| PARKEN Sport vs. Focus Home Interactive | PARKEN Sport vs. China BlueChemical | PARKEN Sport vs. Siamgas And Petrochemicals | PARKEN Sport vs. Sinopec Shanghai Petrochemical |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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