Correlation Between Magic Software and Elmos Semiconductor
Can any of the company-specific risk be diversified away by investing in both Magic Software and Elmos Semiconductor 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 Elmos Semiconductor 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 Elmos Semiconductor SE, you can compare the effects of market volatilities on Magic Software and Elmos Semiconductor 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 Elmos Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and Elmos Semiconductor.
Diversification Opportunities for Magic Software and Elmos Semiconductor
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magic and Elmos is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and Elmos Semiconductor SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elmos Semiconductor 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 Elmos Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elmos Semiconductor has no effect on the direction of Magic Software i.e., Magic Software and Elmos Semiconductor go up and down completely randomly.
Pair Corralation between Magic Software and Elmos Semiconductor
Assuming the 90 days horizon Magic Software is expected to generate 1.52 times less return on investment than Elmos Semiconductor. But when comparing it to its historical volatility, Magic Software Enterprises is 1.53 times less risky than Elmos Semiconductor. It trades about 0.15 of its potential returns per unit of risk. Elmos Semiconductor SE is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 5,490 in Elmos Semiconductor SE on September 1, 2024 and sell it today you would earn a total of 720.00 from holding Elmos Semiconductor SE or generate 13.11% 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. Elmos Semiconductor SE
Performance |
| Timeline |
| Magic Software Enter |
| Elmos Semiconductor |
Magic Software and Elmos Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and Elmos Semiconductor
The main advantage of trading using opposite Magic Software and Elmos Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, Elmos Semiconductor 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 Elmos Semiconductor will offset losses from the drop in Elmos Semiconductor's long position.| Magic Software vs. Synopsys | Magic Software vs. Superior Plus Corp | Magic Software vs. NMI Holdings | Magic Software vs. Origin Agritech |
| Elmos Semiconductor vs. AEON STORES | Elmos Semiconductor vs. Ross Stores | Elmos Semiconductor vs. PREMIER FOODS | Elmos Semiconductor vs. Vastned Retail NV |
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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