Correlation Between MAGIC SOFTWARE and CHIBA BANK
Can any of the company-specific risk be diversified away by investing in both MAGIC SOFTWARE and CHIBA BANK 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 CHIBA BANK 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 CHIBA BANK, you can compare the effects of market volatilities on MAGIC SOFTWARE and CHIBA BANK 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 CHIBA BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGIC SOFTWARE and CHIBA BANK.
Diversification Opportunities for MAGIC SOFTWARE and CHIBA BANK
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MAGIC and CHIBA is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding MAGIC SOFTWARE ENTR and CHIBA BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHIBA BANK 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 CHIBA BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHIBA BANK has no effect on the direction of MAGIC SOFTWARE i.e., MAGIC SOFTWARE and CHIBA BANK go up and down completely randomly.
Pair Corralation between MAGIC SOFTWARE and CHIBA BANK
Assuming the 90 days trading horizon MAGIC SOFTWARE ENTR is expected to generate 1.65 times more return on investment than CHIBA BANK. However, MAGIC SOFTWARE is 1.65 times more volatile than CHIBA BANK. It trades about 0.23 of its potential returns per unit of risk. CHIBA BANK is currently generating about 0.34 per unit of risk. If you would invest 1,020 in MAGIC SOFTWARE ENTR on September 1, 2024 and sell it today you would earn a total of 180.00 from holding MAGIC SOFTWARE ENTR or generate 17.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAGIC SOFTWARE ENTR vs. CHIBA BANK
Performance |
| Timeline |
| MAGIC SOFTWARE ENTR |
| CHIBA BANK |
MAGIC SOFTWARE and CHIBA BANK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAGIC SOFTWARE and CHIBA BANK
The main advantage of trading using opposite MAGIC SOFTWARE and CHIBA BANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAGIC SOFTWARE position performs unexpectedly, CHIBA BANK 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 CHIBA BANK will offset losses from the drop in CHIBA BANK's long position.| MAGIC SOFTWARE vs. SIVERS SEMICONDUCTORS AB | MAGIC SOFTWARE vs. Darden Restaurants | MAGIC SOFTWARE vs. Reliance Steel Aluminum | MAGIC SOFTWARE vs. Q2M Managementberatung AG |
| CHIBA BANK vs. SIVERS SEMICONDUCTORS AB | CHIBA BANK vs. Darden Restaurants | CHIBA BANK vs. Reliance Steel Aluminum | CHIBA BANK vs. Q2M Managementberatung AG |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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