Correlation Between MAGIC SOFTWARE and CompuGroup Medical
Can any of the company-specific risk be diversified away by investing in both MAGIC SOFTWARE and CompuGroup Medical 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 CompuGroup Medical 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 CompuGroup Medical SE, you can compare the effects of market volatilities on MAGIC SOFTWARE and CompuGroup Medical 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 CompuGroup Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGIC SOFTWARE and CompuGroup Medical.
Diversification Opportunities for MAGIC SOFTWARE and CompuGroup Medical
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MAGIC and CompuGroup is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding MAGIC SOFTWARE ENTR and CompuGroup Medical SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompuGroup Medical 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 CompuGroup Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CompuGroup Medical has no effect on the direction of MAGIC SOFTWARE i.e., MAGIC SOFTWARE and CompuGroup Medical go up and down completely randomly.
Pair Corralation between MAGIC SOFTWARE and CompuGroup Medical
Assuming the 90 days trading horizon MAGIC SOFTWARE ENTR is expected to generate 1.35 times more return on investment than CompuGroup Medical. However, MAGIC SOFTWARE is 1.35 times more volatile than CompuGroup Medical SE. It trades about 0.22 of its potential returns per unit of risk. CompuGroup Medical SE is currently generating about 0.27 per unit of risk. If you would invest 1,000.00 in MAGIC SOFTWARE ENTR on September 4, 2024 and sell it today you would earn a total of 170.00 from holding MAGIC SOFTWARE ENTR or generate 17.0% 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. CompuGroup Medical SE
Performance |
| Timeline |
| MAGIC SOFTWARE ENTR |
| CompuGroup Medical |
MAGIC SOFTWARE and CompuGroup Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAGIC SOFTWARE and CompuGroup Medical
The main advantage of trading using opposite MAGIC SOFTWARE and CompuGroup Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAGIC SOFTWARE position performs unexpectedly, CompuGroup Medical 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 CompuGroup Medical will offset losses from the drop in CompuGroup Medical's long position.| MAGIC SOFTWARE vs. Consolidated Communications Holdings | MAGIC SOFTWARE vs. EIDESVIK OFFSHORE NK | MAGIC SOFTWARE vs. Spirent Communications plc | MAGIC SOFTWARE vs. Citic Telecom International |
| CompuGroup Medical vs. ZURICH INSURANCE GROUP | CompuGroup Medical vs. LION ONE METALS | CompuGroup Medical vs. Singapore Reinsurance | CompuGroup Medical vs. REVO INSURANCE SPA |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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