Correlation Between Magic Software and Aurubis AG
Can any of the company-specific risk be diversified away by investing in both Magic Software and Aurubis AG 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 Aurubis AG 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 Aurubis AG, you can compare the effects of market volatilities on Magic Software and Aurubis AG 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 Aurubis AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and Aurubis AG.
Diversification Opportunities for Magic Software and Aurubis AG
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Magic and Aurubis is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and Aurubis AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurubis 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 Aurubis AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurubis AG has no effect on the direction of Magic Software i.e., Magic Software and Aurubis AG go up and down completely randomly.
Pair Corralation between Magic Software and Aurubis AG
Assuming the 90 days horizon Magic Software Enterprises is expected to generate 0.91 times more return on investment than Aurubis AG. However, Magic Software Enterprises is 1.1 times less risky than Aurubis AG. It trades about 0.17 of its potential returns per unit of risk. Aurubis AG is currently generating about -0.01 per unit of risk. If you would invest 1,130 in Magic Software Enterprises on November 3, 2024 and sell it today you would earn a total of 70.00 from holding Magic Software Enterprises or generate 6.19% 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. Aurubis AG
Performance |
| Timeline |
| Magic Software Enter |
| Aurubis AG |
Magic Software and Aurubis AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and Aurubis AG
The main advantage of trading using opposite Magic Software and Aurubis AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, Aurubis AG 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 Aurubis AG will offset losses from the drop in Aurubis AG's long position.| Magic Software vs. Tokyu Construction Co | Magic Software vs. Federal Agricultural Mortgage | Magic Software vs. FARM 51 GROUP | Magic Software vs. Hitachi Construction Machinery |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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