Correlation Between MAGIC SOFTWARE and SCIENCE IN
Can any of the company-specific risk be diversified away by investing in both MAGIC SOFTWARE and SCIENCE IN 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 SCIENCE IN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MAGIC SOFTWARE ENTR and SCIENCE IN SPORT, you can compare the effects of market volatilities on MAGIC SOFTWARE and SCIENCE IN 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 SCIENCE IN. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGIC SOFTWARE and SCIENCE IN.
Diversification Opportunities for MAGIC SOFTWARE and SCIENCE IN
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MAGIC and SCIENCE is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding MAGIC SOFTWARE ENTR and SCIENCE IN SPORT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCIENCE IN SPORT 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 ENTR are associated (or correlated) with SCIENCE IN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCIENCE IN SPORT has no effect on the direction of MAGIC SOFTWARE i.e., MAGIC SOFTWARE and SCIENCE IN go up and down completely randomly.
Pair Corralation between MAGIC SOFTWARE and SCIENCE IN
Assuming the 90 days trading horizon MAGIC SOFTWARE ENTR is expected to generate 0.37 times more return on investment than SCIENCE IN. However, MAGIC SOFTWARE ENTR is 2.71 times less risky than SCIENCE IN. It trades about 0.12 of its potential returns per unit of risk. SCIENCE IN SPORT is currently generating about -0.01 per unit of risk. If you would invest 1,116 in MAGIC SOFTWARE ENTR on October 17, 2024 and sell it today you would earn a total of 44.00 from holding MAGIC SOFTWARE ENTR or generate 3.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAGIC SOFTWARE ENTR vs. SCIENCE IN SPORT
Performance |
| Timeline |
| MAGIC SOFTWARE ENTR |
| SCIENCE IN SPORT |
MAGIC SOFTWARE and SCIENCE IN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAGIC SOFTWARE and SCIENCE IN
The main advantage of trading using opposite MAGIC SOFTWARE and SCIENCE IN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAGIC SOFTWARE position performs unexpectedly, SCIENCE IN 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 SCIENCE IN will offset losses from the drop in SCIENCE IN's long position.| MAGIC SOFTWARE vs. BANKINTER ADR 2007 | MAGIC SOFTWARE vs. JSC Halyk bank | MAGIC SOFTWARE vs. National Beverage Corp | MAGIC SOFTWARE vs. THAI BEVERAGE |
| SCIENCE IN vs. Global Ship Lease | SCIENCE IN vs. WILLIS LEASE FIN | SCIENCE IN vs. GRENKELEASING Dusseldorf | SCIENCE IN vs. Adtalem Global Education |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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