Correlation Between Magic Software and THRACE PLASTICS
Can any of the company-specific risk be diversified away by investing in both Magic Software and THRACE PLASTICS 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 THRACE PLASTICS 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 THRACE PLASTICS, you can compare the effects of market volatilities on Magic Software and THRACE PLASTICS 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 THRACE PLASTICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and THRACE PLASTICS.
Diversification Opportunities for Magic Software and THRACE PLASTICS
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Magic and THRACE is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and THRACE PLASTICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THRACE PLASTICS 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 THRACE PLASTICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THRACE PLASTICS has no effect on the direction of Magic Software i.e., Magic Software and THRACE PLASTICS go up and down completely randomly.
Pair Corralation between Magic Software and THRACE PLASTICS
Assuming the 90 days horizon Magic Software Enterprises is expected to generate 1.56 times more return on investment than THRACE PLASTICS. However, Magic Software is 1.56 times more volatile than THRACE PLASTICS. It trades about 0.08 of its potential returns per unit of risk. THRACE PLASTICS is currently generating about 0.07 per unit of risk. If you would invest 1,136 in Magic Software Enterprises on October 30, 2024 and sell it today you would earn a total of 64.00 from holding Magic Software Enterprises or generate 5.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magic Software Enterprises vs. THRACE PLASTICS
Performance |
| Timeline |
| Magic Software Enter |
| THRACE PLASTICS |
Magic Software and THRACE PLASTICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and THRACE PLASTICS
The main advantage of trading using opposite Magic Software and THRACE PLASTICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, THRACE PLASTICS 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 THRACE PLASTICS will offset losses from the drop in THRACE PLASTICS's long position.| Magic Software vs. TRADELINK ELECTRON | Magic Software vs. FIRST SHIP LEASE | Magic Software vs. Sixt Leasing SE | Magic Software vs. TRADEDOUBLER AB SK |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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