Correlation Between Multi Retail and Magic Software
Can any of the company-specific risk be diversified away by investing in both Multi Retail and Magic Software 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 Multi Retail and Magic Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multi Retail Group and Magic Software Enterprises, you can compare the effects of market volatilities on Multi Retail and Magic Software 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 Multi Retail with a short position of Magic Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Retail and Magic Software.
Diversification Opportunities for Multi Retail and Magic Software
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Multi and Magic is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Multi Retail Group and Magic Software Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magic Software Enter and Multi Retail 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 Multi Retail Group are associated (or correlated) with Magic Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magic Software Enter has no effect on the direction of Multi Retail i.e., Multi Retail and Magic Software go up and down completely randomly.
Pair Corralation between Multi Retail and Magic Software
Assuming the 90 days trading horizon Multi Retail Group is expected to generate 1.4 times more return on investment than Magic Software. However, Multi Retail is 1.4 times more volatile than Magic Software Enterprises. It trades about 0.0 of its potential returns per unit of risk. Magic Software Enterprises is currently generating about -0.02 per unit of risk. If you would invest 134,700 in Multi Retail Group on August 29, 2024 and sell it today you would lose (27,000) from holding Multi Retail Group or give up 20.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multi Retail Group vs. Magic Software Enterprises
Performance |
| Timeline |
| Multi Retail Group |
| Magic Software Enter |
Multi Retail and Magic Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multi Retail and Magic Software
The main advantage of trading using opposite Multi Retail and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi Retail position performs unexpectedly, Magic Software 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 Magic Software will offset losses from the drop in Magic Software's long position.| Multi Retail vs. Opal Balance | Multi Retail vs. B Communications | Multi Retail vs. Holmes Place International | Multi Retail vs. Nova |
| Magic Software vs. Matrix | Magic Software vs. Tower Semiconductor | Magic Software vs. B Communications | Magic Software vs. Petrochemical |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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