Correlation Between MAGIC SOFTWARE and Orange SA
Can any of the company-specific risk be diversified away by investing in both MAGIC SOFTWARE and Orange SA 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 Orange SA 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 Orange SA, you can compare the effects of market volatilities on MAGIC SOFTWARE and Orange SA 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 Orange SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGIC SOFTWARE and Orange SA.
Diversification Opportunities for MAGIC SOFTWARE and Orange SA
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MAGIC and Orange is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding MAGIC SOFTWARE ENTR and Orange SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orange SA 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 Orange SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orange SA has no effect on the direction of MAGIC SOFTWARE i.e., MAGIC SOFTWARE and Orange SA go up and down completely randomly.
Pair Corralation between MAGIC SOFTWARE and Orange SA
Assuming the 90 days trading horizon MAGIC SOFTWARE ENTR is expected to generate 3.19 times more return on investment than Orange SA. However, MAGIC SOFTWARE is 3.19 times more volatile than Orange SA. It trades about 0.1 of its potential returns per unit of risk. Orange SA is currently generating about 0.03 per unit of risk. If you would invest 1,040 in MAGIC SOFTWARE ENTR on August 31, 2024 and sell it today you would earn a total of 60.00 from holding MAGIC SOFTWARE ENTR or generate 5.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAGIC SOFTWARE ENTR vs. Orange SA
Performance |
| Timeline |
| MAGIC SOFTWARE ENTR |
| Orange SA |
MAGIC SOFTWARE and Orange SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAGIC SOFTWARE and Orange SA
The main advantage of trading using opposite MAGIC SOFTWARE and Orange SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAGIC SOFTWARE position performs unexpectedly, Orange SA 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 Orange SA will offset losses from the drop in Orange SA'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 |
| Orange SA vs. Digilife Technologies Limited | Orange SA vs. Uber Technologies | Orange SA vs. GLG LIFE TECH | Orange SA vs. MAGIC SOFTWARE ENTR |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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