Correlation Between Magic Software and STMICROELECTRONICS
Can any of the company-specific risk be diversified away by investing in both Magic Software and STMICROELECTRONICS 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 STMICROELECTRONICS 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 STMICROELECTRONICS, you can compare the effects of market volatilities on Magic Software and STMICROELECTRONICS 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 STMICROELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and STMICROELECTRONICS.
Diversification Opportunities for Magic Software and STMICROELECTRONICS
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magic and STMICROELECTRONICS is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and STMICROELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMICROELECTRONICS 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 STMICROELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMICROELECTRONICS has no effect on the direction of Magic Software i.e., Magic Software and STMICROELECTRONICS go up and down completely randomly.
Pair Corralation between Magic Software and STMICROELECTRONICS
Assuming the 90 days horizon Magic Software Enterprises is expected to generate 1.34 times more return on investment than STMICROELECTRONICS. However, Magic Software is 1.34 times more volatile than STMICROELECTRONICS. It trades about 0.01 of its potential returns per unit of risk. STMICROELECTRONICS is currently generating about -0.02 per unit of risk. If you would invest 1,311 in Magic Software Enterprises on September 14, 2024 and sell it today you would lose (151.00) from holding Magic Software Enterprises or give up 11.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magic Software Enterprises vs. STMICROELECTRONICS
Performance |
| Timeline |
| Magic Software Enter |
| STMICROELECTRONICS |
Magic Software and STMICROELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and STMICROELECTRONICS
The main advantage of trading using opposite Magic Software and STMICROELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, STMICROELECTRONICS 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 STMICROELECTRONICS will offset losses from the drop in STMICROELECTRONICS's long position.| Magic Software vs. Palo Alto Networks | Magic Software vs. HubSpot | Magic Software vs. Superior Plus Corp | Magic Software vs. SIVERS SEMICONDUCTORS AB |
| STMICROELECTRONICS vs. Apple Inc | STMICROELECTRONICS vs. Apple Inc | STMICROELECTRONICS vs. Apple Inc | STMICROELECTRONICS vs. Apple Inc |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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