Correlation Between ProtoSource and Magic Software
Can any of the company-specific risk be diversified away by investing in both ProtoSource 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 ProtoSource and Magic Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProtoSource and Magic Software Enterprises, you can compare the effects of market volatilities on ProtoSource 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 ProtoSource with a short position of Magic Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProtoSource and Magic Software.
Diversification Opportunities for ProtoSource and Magic Software
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ProtoSource and Magic is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding ProtoSource 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 ProtoSource 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 ProtoSource 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 ProtoSource i.e., ProtoSource and Magic Software go up and down completely randomly.
Pair Corralation between ProtoSource and Magic Software
If you would invest 1,211 in Magic Software Enterprises on August 26, 2024 and sell it today you would lose (112.00) from holding Magic Software Enterprises or give up 9.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 0.3% |
| Values | Daily Returns |
ProtoSource vs. Magic Software Enterprises
Performance |
| Timeline |
| ProtoSource |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Magic Software Enter |
ProtoSource and Magic Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProtoSource and Magic Software
The main advantage of trading using opposite ProtoSource and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProtoSource 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.The idea behind ProtoSource and Magic Software Enterprises pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Magic Software vs. The Hackett Group | Magic Software vs. CSP Inc | Magic Software vs. Nayax | Magic Software vs. Formula Systems 1985 |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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