Correlation Between MAGIC SOFTWARE and Carsales
Can any of the company-specific risk be diversified away by investing in both MAGIC SOFTWARE and Carsales 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 Carsales 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 Carsales, you can compare the effects of market volatilities on MAGIC SOFTWARE and Carsales 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 Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGIC SOFTWARE and Carsales.
Diversification Opportunities for MAGIC SOFTWARE and Carsales
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MAGIC and Carsales is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding MAGIC SOFTWARE ENTR and Carsales in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carsales 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 Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carsales has no effect on the direction of MAGIC SOFTWARE i.e., MAGIC SOFTWARE and Carsales go up and down completely randomly.
Pair Corralation between MAGIC SOFTWARE and Carsales
Assuming the 90 days trading horizon MAGIC SOFTWARE ENTR is expected to generate 0.91 times more return on investment than Carsales. However, MAGIC SOFTWARE ENTR is 1.1 times less risky than Carsales. It trades about 0.23 of its potential returns per unit of risk. Carsales is currently generating about 0.11 per unit of risk. If you would invest 1,130 in MAGIC SOFTWARE ENTR on November 8, 2024 and sell it today you would earn a total of 120.00 from holding MAGIC SOFTWARE ENTR or generate 10.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAGIC SOFTWARE ENTR vs. Carsales
Performance |
| Timeline |
| MAGIC SOFTWARE ENTR |
| Carsales |
MAGIC SOFTWARE and Carsales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAGIC SOFTWARE and Carsales
The main advantage of trading using opposite MAGIC SOFTWARE and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAGIC SOFTWARE position performs unexpectedly, Carsales 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 Carsales will offset losses from the drop in Carsales' long position.| MAGIC SOFTWARE vs. Summit Hotel Properties | MAGIC SOFTWARE vs. Choice Hotels International | MAGIC SOFTWARE vs. MELIA HOTELS | MAGIC SOFTWARE vs. CHINA TONTINE WINES |
| Carsales vs. Apollo Investment Corp | Carsales vs. PennantPark Investment | Carsales vs. Chuangs China Investments | Carsales vs. HK Electric Investments |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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