Correlation Between Magic Software and Sinopec Shanghai
Can any of the company-specific risk be diversified away by investing in both Magic Software and Sinopec Shanghai 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 Sinopec Shanghai 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 Sinopec Shanghai Petrochemical, you can compare the effects of market volatilities on Magic Software and Sinopec Shanghai 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 Sinopec Shanghai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and Sinopec Shanghai.
Diversification Opportunities for Magic Software and Sinopec Shanghai
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Magic and Sinopec is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and Sinopec Shanghai Petrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinopec Shanghai Pet 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 Sinopec Shanghai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinopec Shanghai Pet has no effect on the direction of Magic Software i.e., Magic Software and Sinopec Shanghai go up and down completely randomly.
Pair Corralation between Magic Software and Sinopec Shanghai
Assuming the 90 days horizon Magic Software Enterprises is expected to generate 0.54 times more return on investment than Sinopec Shanghai. However, Magic Software Enterprises is 1.85 times less risky than Sinopec Shanghai. It trades about 0.08 of its potential returns per unit of risk. Sinopec Shanghai Petrochemical is currently generating about 0.02 per unit of risk. If you would invest 1,020 in Magic Software Enterprises on August 29, 2024 and sell it today you would earn a total of 40.00 from holding Magic Software Enterprises or generate 3.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magic Software Enterprises vs. Sinopec Shanghai Petrochemical
Performance |
| Timeline |
| Magic Software Enter |
| Sinopec Shanghai Pet |
Magic Software and Sinopec Shanghai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and Sinopec Shanghai
The main advantage of trading using opposite Magic Software and Sinopec Shanghai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, Sinopec Shanghai 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 Sinopec Shanghai will offset losses from the drop in Sinopec Shanghai's long position.| Magic Software vs. Palo Alto Networks | Magic Software vs. Superior Plus Corp | Magic Software vs. NMI Holdings | Magic Software vs. SIVERS SEMICONDUCTORS AB |
| Sinopec Shanghai vs. Neste Oyj | Sinopec Shanghai vs. Superior Plus Corp | Sinopec Shanghai vs. NMI Holdings | Sinopec Shanghai vs. Origin Agritech |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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