Correlation Between Magic Software and BW OFFSHORE
Can any of the company-specific risk be diversified away by investing in both Magic Software and BW OFFSHORE 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 BW OFFSHORE 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 BW OFFSHORE LTD, you can compare the effects of market volatilities on Magic Software and BW OFFSHORE 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 BW OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and BW OFFSHORE.
Diversification Opportunities for Magic Software and BW OFFSHORE
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Magic and XY81 is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and BW OFFSHORE LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW OFFSHORE LTD 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 BW OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW OFFSHORE LTD has no effect on the direction of Magic Software i.e., Magic Software and BW OFFSHORE go up and down completely randomly.
Pair Corralation between Magic Software and BW OFFSHORE
Assuming the 90 days horizon Magic Software Enterprises is expected to generate 1.1 times more return on investment than BW OFFSHORE. However, Magic Software is 1.1 times more volatile than BW OFFSHORE LTD. It trades about 0.06 of its potential returns per unit of risk. BW OFFSHORE LTD is currently generating about 0.0 per unit of risk. If you would invest 928.00 in Magic Software Enterprises on September 1, 2024 and sell it today you would earn a total of 172.00 from holding Magic Software Enterprises or generate 18.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magic Software Enterprises vs. BW OFFSHORE LTD
Performance |
| Timeline |
| Magic Software Enter |
| BW OFFSHORE LTD |
Magic Software and BW OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and BW OFFSHORE
The main advantage of trading using opposite Magic Software and BW OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, BW OFFSHORE 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 BW OFFSHORE will offset losses from the drop in BW OFFSHORE's long position.| Magic Software vs. Synopsys | Magic Software vs. Superior Plus Corp | Magic Software vs. NMI Holdings | Magic Software vs. Origin Agritech |
| BW OFFSHORE vs. Zurich Insurance Group | BW OFFSHORE vs. NIPPON MEAT PACKERS | BW OFFSHORE vs. PT Indofood Sukses | BW OFFSHORE vs. JJ SNACK FOODS |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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