Correlation Between MAGIC SOFTWARE and Tokyo Electron
Can any of the company-specific risk be diversified away by investing in both MAGIC SOFTWARE and Tokyo Electron 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 Tokyo Electron 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 Tokyo Electron Limited, you can compare the effects of market volatilities on MAGIC SOFTWARE and Tokyo Electron 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 Tokyo Electron. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGIC SOFTWARE and Tokyo Electron.
Diversification Opportunities for MAGIC SOFTWARE and Tokyo Electron
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MAGIC and Tokyo is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding MAGIC SOFTWARE ENTR and Tokyo Electron Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokyo Electron 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 Tokyo Electron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokyo Electron has no effect on the direction of MAGIC SOFTWARE i.e., MAGIC SOFTWARE and Tokyo Electron go up and down completely randomly.
Pair Corralation between MAGIC SOFTWARE and Tokyo Electron
Assuming the 90 days trading horizon MAGIC SOFTWARE is expected to generate 1.61 times less return on investment than Tokyo Electron. But when comparing it to its historical volatility, MAGIC SOFTWARE ENTR is 1.06 times less risky than Tokyo Electron. It trades about 0.05 of its potential returns per unit of risk. Tokyo Electron Limited is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 15,505 in Tokyo Electron Limited on November 27, 2024 and sell it today you would earn a total of 465.00 from holding Tokyo Electron Limited or generate 3.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAGIC SOFTWARE ENTR vs. Tokyo Electron Limited
Performance |
| Timeline |
| MAGIC SOFTWARE ENTR |
| Tokyo Electron |
MAGIC SOFTWARE and Tokyo Electron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAGIC SOFTWARE and Tokyo Electron
The main advantage of trading using opposite MAGIC SOFTWARE and Tokyo Electron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAGIC SOFTWARE position performs unexpectedly, Tokyo Electron 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 Tokyo Electron will offset losses from the drop in Tokyo Electron's long position.| MAGIC SOFTWARE vs. UNITED INTERNET N | MAGIC SOFTWARE vs. Cal Maine Foods | MAGIC SOFTWARE vs. EBRO FOODS | MAGIC SOFTWARE vs. PATTIES FOODS |
| Tokyo Electron vs. THORNEY TECHS LTD | Tokyo Electron vs. Addtech AB | Tokyo Electron vs. Apollo Investment Corp | Tokyo Electron vs. Sunny Optical Technology |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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