Correlation Between Magic Software and LEWAG HOLDING
Can any of the company-specific risk be diversified away by investing in both Magic Software and LEWAG HOLDING 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 LEWAG HOLDING 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 LEWAG HOLDING AG, you can compare the effects of market volatilities on Magic Software and LEWAG HOLDING 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 LEWAG HOLDING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and LEWAG HOLDING.
Diversification Opportunities for Magic Software and LEWAG HOLDING
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magic and LEWAG is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and LEWAG HOLDING AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEWAG HOLDING 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 LEWAG HOLDING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEWAG HOLDING AG has no effect on the direction of Magic Software i.e., Magic Software and LEWAG HOLDING go up and down completely randomly.
Pair Corralation between Magic Software and LEWAG HOLDING
Assuming the 90 days horizon Magic Software Enterprises is expected to generate 0.98 times more return on investment than LEWAG HOLDING. However, Magic Software Enterprises is 1.02 times less risky than LEWAG HOLDING. It trades about 0.03 of its potential returns per unit of risk. LEWAG HOLDING AG is currently generating about -0.11 per unit of risk. If you would invest 1,030 in Magic Software Enterprises on August 31, 2024 and sell it today you would earn a total of 10.00 from holding Magic Software Enterprises or generate 0.97% 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. LEWAG HOLDING AG
Performance |
| Timeline |
| Magic Software Enter |
| LEWAG HOLDING AG |
Magic Software and LEWAG HOLDING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and LEWAG HOLDING
The main advantage of trading using opposite Magic Software and LEWAG HOLDING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, LEWAG HOLDING 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 LEWAG HOLDING will offset losses from the drop in LEWAG HOLDING's long position.| Magic Software vs. Synopsys | Magic Software vs. Superior Plus Corp | Magic Software vs. NMI Holdings | Magic Software vs. Origin Agritech |
| LEWAG HOLDING vs. Compugroup Medical SE | LEWAG HOLDING vs. Magic Software Enterprises | LEWAG HOLDING vs. FORMPIPE SOFTWARE AB | LEWAG HOLDING vs. Check Point Software |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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