Correlation Between SERI INDUSTRIAL and Magic Software
Can any of the company-specific risk be diversified away by investing in both SERI INDUSTRIAL 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 SERI INDUSTRIAL and Magic Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SERI INDUSTRIAL EO and Magic Software Enterprises, you can compare the effects of market volatilities on SERI INDUSTRIAL 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 SERI INDUSTRIAL with a short position of Magic Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of SERI INDUSTRIAL and Magic Software.
Diversification Opportunities for SERI INDUSTRIAL and Magic Software
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SERI and Magic is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding SERI INDUSTRIAL EO 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 SERI INDUSTRIAL 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 SERI INDUSTRIAL EO 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 SERI INDUSTRIAL i.e., SERI INDUSTRIAL and Magic Software go up and down completely randomly.
Pair Corralation between SERI INDUSTRIAL and Magic Software
Assuming the 90 days trading horizon SERI INDUSTRIAL is expected to generate 1.56 times less return on investment than Magic Software. In addition to that, SERI INDUSTRIAL is 1.91 times more volatile than Magic Software Enterprises. It trades about 0.05 of its total potential returns per unit of risk. Magic Software Enterprises is currently generating about 0.15 per unit of volatility. If you would invest 1,010 in Magic Software Enterprises on September 1, 2024 and sell it today you would earn a total of 90.00 from holding Magic Software Enterprises or generate 8.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SERI INDUSTRIAL EO vs. Magic Software Enterprises
Performance |
| Timeline |
| SERI INDUSTRIAL EO |
| Magic Software Enter |
SERI INDUSTRIAL and Magic Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SERI INDUSTRIAL and Magic Software
The main advantage of trading using opposite SERI INDUSTRIAL and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SERI INDUSTRIAL 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.| SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc |
| 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |