Correlation Between MAGIC SOFTWARE and ULTRA CLEAN
Can any of the company-specific risk be diversified away by investing in both MAGIC SOFTWARE and ULTRA CLEAN 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 ULTRA CLEAN 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 ULTRA CLEAN HLDGS, you can compare the effects of market volatilities on MAGIC SOFTWARE and ULTRA CLEAN 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 ULTRA CLEAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGIC SOFTWARE and ULTRA CLEAN.
Diversification Opportunities for MAGIC SOFTWARE and ULTRA CLEAN
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MAGIC and ULTRA is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding MAGIC SOFTWARE ENTR and ULTRA CLEAN HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ULTRA CLEAN HLDGS 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 ULTRA CLEAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ULTRA CLEAN HLDGS has no effect on the direction of MAGIC SOFTWARE i.e., MAGIC SOFTWARE and ULTRA CLEAN go up and down completely randomly.
Pair Corralation between MAGIC SOFTWARE and ULTRA CLEAN
Assuming the 90 days trading horizon MAGIC SOFTWARE is expected to generate 4.66 times less return on investment than ULTRA CLEAN. In addition to that, MAGIC SOFTWARE is 1.01 times more volatile than ULTRA CLEAN HLDGS. It trades about 0.01 of its total potential returns per unit of risk. ULTRA CLEAN HLDGS is currently generating about 0.02 per unit of volatility. If you would invest 3,093 in ULTRA CLEAN HLDGS on October 16, 2024 and sell it today you would earn a total of 487.00 from holding ULTRA CLEAN HLDGS or generate 15.75% 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. ULTRA CLEAN HLDGS
Performance |
| Timeline |
| MAGIC SOFTWARE ENTR |
| ULTRA CLEAN HLDGS |
MAGIC SOFTWARE and ULTRA CLEAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAGIC SOFTWARE and ULTRA CLEAN
The main advantage of trading using opposite MAGIC SOFTWARE and ULTRA CLEAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAGIC SOFTWARE position performs unexpectedly, ULTRA CLEAN 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 ULTRA CLEAN will offset losses from the drop in ULTRA CLEAN's long position.| MAGIC SOFTWARE vs. BANKINTER ADR 2007 | MAGIC SOFTWARE vs. JSC Halyk bank | MAGIC SOFTWARE vs. National Beverage Corp | MAGIC SOFTWARE vs. THAI BEVERAGE |
| ULTRA CLEAN vs. CAREER EDUCATION | ULTRA CLEAN vs. Adtalem Global Education | ULTRA CLEAN vs. MAGIC SOFTWARE ENTR | ULTRA CLEAN vs. CHINA EDUCATION GROUP |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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