Correlation Between NIPPON MEAT and Magic Software
Can any of the company-specific risk be diversified away by investing in both NIPPON MEAT 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 NIPPON MEAT and Magic Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NIPPON MEAT PACKERS and Magic Software Enterprises, you can compare the effects of market volatilities on NIPPON MEAT 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 NIPPON MEAT with a short position of Magic Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIPPON MEAT and Magic Software.
Diversification Opportunities for NIPPON MEAT and Magic Software
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NIPPON and Magic is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding NIPPON MEAT PACKERS 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 NIPPON MEAT 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 NIPPON MEAT PACKERS 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 NIPPON MEAT i.e., NIPPON MEAT and Magic Software go up and down completely randomly.
Pair Corralation between NIPPON MEAT and Magic Software
Assuming the 90 days trading horizon NIPPON MEAT PACKERS is expected to generate 0.49 times more return on investment than Magic Software. However, NIPPON MEAT PACKERS is 2.05 times less risky than Magic Software. It trades about 0.05 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 2,560 in NIPPON MEAT PACKERS on September 2, 2024 and sell it today you would earn a total of 660.00 from holding NIPPON MEAT PACKERS or generate 25.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NIPPON MEAT PACKERS vs. Magic Software Enterprises
Performance |
| Timeline |
| NIPPON MEAT PACKERS |
| Magic Software Enter |
NIPPON MEAT and Magic Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NIPPON MEAT and Magic Software
The main advantage of trading using opposite NIPPON MEAT and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NIPPON MEAT 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.| NIPPON MEAT vs. SIVERS SEMICONDUCTORS AB | NIPPON MEAT vs. Darden Restaurants | NIPPON MEAT vs. Reliance Steel Aluminum | NIPPON MEAT vs. Q2M Managementberatung AG |
| Magic Software vs. Synopsys | Magic Software vs. Superior Plus Corp | Magic Software vs. NMI Holdings | Magic Software vs. Origin Agritech |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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