Correlation Between Magic Software and Information Services
Can any of the company-specific risk be diversified away by investing in both Magic Software and Information Services 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 Information Services 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 Information Services International Dentsu, you can compare the effects of market volatilities on Magic Software and Information Services 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 Information Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and Information Services.
Diversification Opportunities for Magic Software and Information Services
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magic and Information is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and Information Services Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information Services 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 Information Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information Services has no effect on the direction of Magic Software i.e., Magic Software and Information Services go up and down completely randomly.
Pair Corralation between Magic Software and Information Services
Assuming the 90 days horizon Magic Software Enterprises is expected to generate 1.38 times more return on investment than Information Services. However, Magic Software is 1.38 times more volatile than Information Services International Dentsu. It trades about 0.26 of its potential returns per unit of risk. Information Services International Dentsu is currently generating about 0.29 per unit of risk. If you would invest 995.00 in Magic Software Enterprises on September 5, 2024 and sell it today you would earn a total of 175.00 from holding Magic Software Enterprises or generate 17.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magic Software Enterprises vs. Information Services Internati
Performance |
| Timeline |
| Magic Software Enter |
| Information Services |
Magic Software and Information Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and Information Services
The main advantage of trading using opposite Magic Software and Information Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, Information Services 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 Information Services will offset losses from the drop in Information Services' long position.| Magic Software vs. Superior Plus Corp | Magic Software vs. NMI Holdings | Magic Software vs. Origin Agritech | Magic Software vs. SIVERS SEMICONDUCTORS AB |
| Information Services vs. SWISS WATER DECAFFCOFFEE | Information Services vs. Japan Tobacco | Information Services vs. Transportadora de Gas | Information Services vs. BJs Restaurants |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |