Correlation Between Magic Software and Diamyd Medical
Can any of the company-specific risk be diversified away by investing in both Magic Software and Diamyd 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 Diamyd 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 Diamyd Medical AB, you can compare the effects of market volatilities on Magic Software and Diamyd 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 Diamyd Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and Diamyd Medical.
Diversification Opportunities for Magic Software and Diamyd Medical
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magic and Diamyd is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and Diamyd Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamyd Medical 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 Diamyd Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamyd Medical AB has no effect on the direction of Magic Software i.e., Magic Software and Diamyd Medical go up and down completely randomly.
Pair Corralation between Magic Software and Diamyd Medical
Assuming the 90 days horizon Magic Software Enterprises is expected to generate 0.7 times more return on investment than Diamyd Medical. However, Magic Software Enterprises is 1.44 times less risky than Diamyd Medical. It trades about 0.25 of its potential returns per unit of risk. Diamyd Medical AB is currently generating about 0.09 per unit of risk. If you would invest 995.00 in Magic Software Enterprises on September 3, 2024 and sell it today you would earn a total of 165.00 from holding Magic Software Enterprises or generate 16.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magic Software Enterprises vs. Diamyd Medical AB
Performance |
| Timeline |
| Magic Software Enter |
| Diamyd Medical AB |
Magic Software and Diamyd Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and Diamyd Medical
The main advantage of trading using opposite Magic Software and Diamyd Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, Diamyd 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 Diamyd Medical will offset losses from the drop in Diamyd Medical'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 |
| Diamyd Medical vs. WIMFARM SA EO | Diamyd Medical vs. Tencent Music Entertainment | Diamyd Medical vs. ULTRA CLEAN HLDGS | Diamyd Medical vs. AGRICULTBK HADR25 YC |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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