Correlation Between MAGIC SOFTWARE and NESTE OYJ
Can any of the company-specific risk be diversified away by investing in both MAGIC SOFTWARE and NESTE OYJ 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 NESTE OYJ 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 NESTE OYJ UNSPADR, you can compare the effects of market volatilities on MAGIC SOFTWARE and NESTE OYJ 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 NESTE OYJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGIC SOFTWARE and NESTE OYJ.
Diversification Opportunities for MAGIC SOFTWARE and NESTE OYJ
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MAGIC and NESTE is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding MAGIC SOFTWARE ENTR and NESTE OYJ UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NESTE OYJ UNSPADR 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 NESTE OYJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NESTE OYJ UNSPADR has no effect on the direction of MAGIC SOFTWARE i.e., MAGIC SOFTWARE and NESTE OYJ go up and down completely randomly.
Pair Corralation between MAGIC SOFTWARE and NESTE OYJ
Assuming the 90 days trading horizon MAGIC SOFTWARE ENTR is expected to generate 1.06 times more return on investment than NESTE OYJ. However, MAGIC SOFTWARE is 1.06 times more volatile than NESTE OYJ UNSPADR. It trades about 0.0 of its potential returns per unit of risk. NESTE OYJ UNSPADR is currently generating about -0.07 per unit of risk. If you would invest 1,422 in MAGIC SOFTWARE ENTR on September 3, 2024 and sell it today you would lose (222.00) from holding MAGIC SOFTWARE ENTR or give up 15.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAGIC SOFTWARE ENTR vs. NESTE OYJ UNSPADR
Performance |
| Timeline |
| MAGIC SOFTWARE ENTR |
| NESTE OYJ UNSPADR |
MAGIC SOFTWARE and NESTE OYJ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAGIC SOFTWARE and NESTE OYJ
The main advantage of trading using opposite MAGIC SOFTWARE and NESTE OYJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAGIC SOFTWARE position performs unexpectedly, NESTE OYJ 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 NESTE OYJ will offset losses from the drop in NESTE OYJ's long position.| MAGIC SOFTWARE vs. TOTAL GABON | MAGIC SOFTWARE vs. Walgreens Boots Alliance | MAGIC SOFTWARE vs. Peak Resources Limited |
| NESTE OYJ vs. DOCDATA | NESTE OYJ vs. Datang International Power | NESTE OYJ vs. SCANSOURCE | NESTE OYJ 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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