Correlation Between MAGIC SOFTWARE and TOTAL GABON
Can any of the company-specific risk be diversified away by investing in both MAGIC SOFTWARE and TOTAL GABON 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 TOTAL GABON 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 TOTAL GABON, you can compare the effects of market volatilities on MAGIC SOFTWARE and TOTAL GABON 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 TOTAL GABON. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGIC SOFTWARE and TOTAL GABON.
Diversification Opportunities for MAGIC SOFTWARE and TOTAL GABON
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MAGIC and TOTAL is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding MAGIC SOFTWARE ENTR and TOTAL GABON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOTAL GABON 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 TOTAL GABON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOTAL GABON has no effect on the direction of MAGIC SOFTWARE i.e., MAGIC SOFTWARE and TOTAL GABON go up and down completely randomly.
Pair Corralation between MAGIC SOFTWARE and TOTAL GABON
Assuming the 90 days trading horizon MAGIC SOFTWARE is expected to generate 1.1 times less return on investment than TOTAL GABON. In addition to that, MAGIC SOFTWARE is 1.58 times more volatile than TOTAL GABON. It trades about 0.02 of its total potential returns per unit of risk. TOTAL GABON is currently generating about 0.04 per unit of volatility. If you would invest 15,132 in TOTAL GABON on September 4, 2024 and sell it today you would earn a total of 3,218 from holding TOTAL GABON or generate 21.27% 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. TOTAL GABON
Performance |
| Timeline |
| MAGIC SOFTWARE ENTR |
| TOTAL GABON |
MAGIC SOFTWARE and TOTAL GABON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAGIC SOFTWARE and TOTAL GABON
The main advantage of trading using opposite MAGIC SOFTWARE and TOTAL GABON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAGIC SOFTWARE position performs unexpectedly, TOTAL GABON 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 TOTAL GABON will offset losses from the drop in TOTAL GABON's long position.| MAGIC SOFTWARE vs. Consolidated Communications Holdings | MAGIC SOFTWARE vs. EIDESVIK OFFSHORE NK | MAGIC SOFTWARE vs. Spirent Communications plc | MAGIC SOFTWARE vs. Citic Telecom International |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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