Correlation Between Magic Software and Easy Software
Can any of the company-specific risk be diversified away by investing in both Magic Software and Easy Software 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 Easy Software 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 Easy Software AG, you can compare the effects of market volatilities on Magic Software and Easy Software 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 Easy Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and Easy Software.
Diversification Opportunities for Magic Software and Easy Software
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Magic and Easy is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and Easy Software AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Easy Software AG 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 Easy Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Easy Software AG has no effect on the direction of Magic Software i.e., Magic Software and Easy Software go up and down completely randomly.
Pair Corralation between Magic Software and Easy Software
Assuming the 90 days horizon Magic Software Enterprises is expected to generate 0.51 times more return on investment than Easy Software. However, Magic Software Enterprises is 1.97 times less risky than Easy Software. It trades about 0.25 of its potential returns per unit of risk. Easy Software AG is currently generating about -0.06 per unit of risk. If you would invest 1,116 in Magic Software Enterprises on October 20, 2024 and sell it today you would earn a total of 84.00 from holding Magic Software Enterprises or generate 7.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Magic Software Enterprises vs. Easy Software AG
Performance |
| Timeline |
| Magic Software Enter |
| Easy Software AG |
Magic Software and Easy Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and Easy Software
The main advantage of trading using opposite Magic Software and Easy Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, Easy Software 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 Easy Software will offset losses from the drop in Easy Software's long position.| Magic Software vs. National Beverage Corp | Magic Software vs. COFCO Joycome Foods | Magic Software vs. Performance Food Group | Magic Software vs. THAI BEVERAGE |
| Easy Software vs. FAIR ISAAC | Easy Software vs. ITALIAN WINE BRANDS | Easy Software vs. SEALED AIR | Easy Software vs. Air New Zealand |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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