Correlation Between MAGIC SOFTWARE and SK TELECOM
Can any of the company-specific risk be diversified away by investing in both MAGIC SOFTWARE and SK TELECOM 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 SK TELECOM 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 SK TELECOM TDADR, you can compare the effects of market volatilities on MAGIC SOFTWARE and SK TELECOM 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 SK TELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGIC SOFTWARE and SK TELECOM.
Diversification Opportunities for MAGIC SOFTWARE and SK TELECOM
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MAGIC and KMBA is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding MAGIC SOFTWARE ENTR and SK TELECOM TDADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK TELECOM TDADR 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 SK TELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK TELECOM TDADR has no effect on the direction of MAGIC SOFTWARE i.e., MAGIC SOFTWARE and SK TELECOM go up and down completely randomly.
Pair Corralation between MAGIC SOFTWARE and SK TELECOM
Assuming the 90 days trading horizon MAGIC SOFTWARE ENTR is expected to generate 1.04 times more return on investment than SK TELECOM. However, MAGIC SOFTWARE is 1.04 times more volatile than SK TELECOM TDADR. It trades about 0.12 of its potential returns per unit of risk. SK TELECOM TDADR is currently generating about -0.01 per unit of risk. If you would invest 979.00 in MAGIC SOFTWARE ENTR on October 18, 2024 and sell it today you would earn a total of 221.00 from holding MAGIC SOFTWARE ENTR or generate 22.57% 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. SK TELECOM TDADR
Performance |
| Timeline |
| MAGIC SOFTWARE ENTR |
| SK TELECOM TDADR |
MAGIC SOFTWARE and SK TELECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAGIC SOFTWARE and SK TELECOM
The main advantage of trading using opposite MAGIC SOFTWARE and SK TELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAGIC SOFTWARE position performs unexpectedly, SK TELECOM 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 SK TELECOM will offset losses from the drop in SK TELECOM's long position.| MAGIC SOFTWARE vs. Nok Airlines PCL | MAGIC SOFTWARE vs. JAPAN AIRLINES | MAGIC SOFTWARE vs. SINGAPORE AIRLINES | MAGIC SOFTWARE vs. American Airlines Group |
| SK TELECOM vs. ANTA SPORTS PRODUCT | SK TELECOM vs. MAGIC SOFTWARE ENTR | SK TELECOM vs. Fortescue Metals Group | SK TELECOM vs. JD SPORTS FASH |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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