Correlation Between MAGIC SOFTWARE and SERI INDUSTRIAL
Can any of the company-specific risk be diversified away by investing in both MAGIC SOFTWARE and SERI INDUSTRIAL 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 SERI INDUSTRIAL 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 SERI INDUSTRIAL EO, you can compare the effects of market volatilities on MAGIC SOFTWARE and SERI INDUSTRIAL 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 SERI INDUSTRIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGIC SOFTWARE and SERI INDUSTRIAL.
Diversification Opportunities for MAGIC SOFTWARE and SERI INDUSTRIAL
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MAGIC and SERI is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding MAGIC SOFTWARE ENTR and SERI INDUSTRIAL EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SERI INDUSTRIAL EO 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 SERI INDUSTRIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SERI INDUSTRIAL EO has no effect on the direction of MAGIC SOFTWARE i.e., MAGIC SOFTWARE and SERI INDUSTRIAL go up and down completely randomly.
Pair Corralation between MAGIC SOFTWARE and SERI INDUSTRIAL
Assuming the 90 days trading horizon MAGIC SOFTWARE ENTR is expected to generate 0.59 times more return on investment than SERI INDUSTRIAL. However, MAGIC SOFTWARE ENTR is 1.71 times less risky than SERI INDUSTRIAL. It trades about 0.19 of its potential returns per unit of risk. SERI INDUSTRIAL EO is currently generating about 0.0 per unit of risk. If you would invest 1,040 in MAGIC SOFTWARE ENTR on September 13, 2024 and sell it today you would earn a total of 140.00 from holding MAGIC SOFTWARE ENTR or generate 13.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAGIC SOFTWARE ENTR vs. SERI INDUSTRIAL EO
Performance |
| Timeline |
| MAGIC SOFTWARE ENTR |
| SERI INDUSTRIAL EO |
MAGIC SOFTWARE and SERI INDUSTRIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAGIC SOFTWARE and SERI INDUSTRIAL
The main advantage of trading using opposite MAGIC SOFTWARE and SERI INDUSTRIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAGIC SOFTWARE position performs unexpectedly, SERI INDUSTRIAL 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 SERI INDUSTRIAL will offset losses from the drop in SERI INDUSTRIAL's long position.| MAGIC SOFTWARE vs. Apple Inc | MAGIC SOFTWARE vs. Apple Inc | MAGIC SOFTWARE vs. Apple Inc | MAGIC SOFTWARE vs. Apple Inc |
| SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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