Correlation Between MAGIC SOFTWARE and Tianjin Capital

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both MAGIC SOFTWARE and Tianjin Capital 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 Tianjin Capital 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 Tianjin Capital Environmental, you can compare the effects of market volatilities on MAGIC SOFTWARE and Tianjin Capital 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 Tianjin Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGIC SOFTWARE and Tianjin Capital.

Diversification Opportunities for MAGIC SOFTWARE and Tianjin Capital

0.61
  Correlation Coefficient

Poor diversification

The 3 months correlation between MAGIC and Tianjin is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding MAGIC SOFTWARE ENTR and Tianjin Capital Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin Capital Envi 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 Tianjin Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin Capital Envi has no effect on the direction of MAGIC SOFTWARE i.e., MAGIC SOFTWARE and Tianjin Capital go up and down completely randomly.

Pair Corralation between MAGIC SOFTWARE and Tianjin Capital

Assuming the 90 days trading horizon MAGIC SOFTWARE is expected to generate 2.48 times less return on investment than Tianjin Capital. But when comparing it to its historical volatility, MAGIC SOFTWARE ENTR is 1.76 times less risky than Tianjin Capital. It trades about 0.05 of its potential returns per unit of risk. Tianjin Capital Environmental is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  17.00  in Tianjin Capital Environmental on October 25, 2024 and sell it today you would earn a total of  21.00  from holding Tianjin Capital Environmental or generate 123.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

MAGIC SOFTWARE ENTR  vs.  Tianjin Capital Environmental

 Performance 
       Timeline  
MAGIC SOFTWARE ENTR 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in MAGIC SOFTWARE ENTR are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, MAGIC SOFTWARE unveiled solid returns over the last few months and may actually be approaching a breakup point.
Tianjin Capital Envi 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Tianjin Capital Environmental are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Tianjin Capital is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

MAGIC SOFTWARE and Tianjin Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MAGIC SOFTWARE and Tianjin Capital

The main advantage of trading using opposite MAGIC SOFTWARE and Tianjin Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAGIC SOFTWARE position performs unexpectedly, Tianjin Capital 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 Tianjin Capital will offset losses from the drop in Tianjin Capital's long position.
The idea behind MAGIC SOFTWARE ENTR and Tianjin Capital Environmental pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

Other Complementary Tools

Share Portfolio
Track or share privately all of your investments from the convenience of any device
Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
ETFs
Find actively traded Exchange Traded Funds (ETF) from around the world