Correlation Between MAGIC SOFTWARE and FORMPIPE SOFTWARE
Can any of the company-specific risk be diversified away by investing in both MAGIC SOFTWARE and FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE AB, you can compare the effects of market volatilities on MAGIC SOFTWARE and FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGIC SOFTWARE and FORMPIPE SOFTWARE.
Diversification Opportunities for MAGIC SOFTWARE and FORMPIPE SOFTWARE
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between MAGIC and FORMPIPE is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding MAGIC SOFTWARE ENTR and FORMPIPE SOFTWARE AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FORMPIPE SOFTWARE has no effect on the direction of MAGIC SOFTWARE i.e., MAGIC SOFTWARE and FORMPIPE SOFTWARE go up and down completely randomly.
Pair Corralation between MAGIC SOFTWARE and FORMPIPE SOFTWARE
Assuming the 90 days trading horizon MAGIC SOFTWARE ENTR is expected to under-perform the FORMPIPE SOFTWARE. In addition to that, MAGIC SOFTWARE is 1.12 times more volatile than FORMPIPE SOFTWARE AB. It trades about -0.01 of its total potential returns per unit of risk. FORMPIPE SOFTWARE AB is currently generating about 0.04 per unit of volatility. If you would invest 162.00 in FORMPIPE SOFTWARE AB on August 24, 2024 and sell it today you would earn a total of 54.00 from holding FORMPIPE SOFTWARE AB or generate 33.33% 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. FORMPIPE SOFTWARE AB
Performance |
| Timeline |
| MAGIC SOFTWARE ENTR |
| FORMPIPE SOFTWARE |
MAGIC SOFTWARE and FORMPIPE SOFTWARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAGIC SOFTWARE and FORMPIPE SOFTWARE
The main advantage of trading using opposite MAGIC SOFTWARE and FORMPIPE SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAGIC SOFTWARE position performs unexpectedly, FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE will offset losses from the drop in FORMPIPE SOFTWARE's long position.| MAGIC SOFTWARE vs. Apple Inc | MAGIC SOFTWARE vs. Apple Inc | MAGIC SOFTWARE vs. Apple Inc | MAGIC SOFTWARE vs. Apple Inc |
| FORMPIPE SOFTWARE vs. Salesforce | FORMPIPE SOFTWARE vs. Nemetschek AG ON | FORMPIPE SOFTWARE vs. PagerDuty | FORMPIPE SOFTWARE vs. Superior Plus Corp |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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