Correlation Between Regal Hotels and Magic Software
Can any of the company-specific risk be diversified away by investing in both Regal Hotels 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 Regal Hotels and Magic Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regal Hotels International and Magic Software Enterprises, you can compare the effects of market volatilities on Regal Hotels 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 Regal Hotels with a short position of Magic Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regal Hotels and Magic Software.
Diversification Opportunities for Regal Hotels and Magic Software
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Regal and Magic is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Regal Hotels International 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 Regal Hotels 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 Regal Hotels International 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 Regal Hotels i.e., Regal Hotels and Magic Software go up and down completely randomly.
Pair Corralation between Regal Hotels and Magic Software
Assuming the 90 days trading horizon Regal Hotels is expected to generate 42.98 times less return on investment than Magic Software. But when comparing it to its historical volatility, Regal Hotels International is 1.64 times less risky than Magic Software. It trades about 0.01 of its potential returns per unit of risk. Magic Software Enterprises is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,000.00 in Magic Software Enterprises on September 2, 2024 and sell it today you would earn a total of 160.00 from holding Magic Software Enterprises or generate 16.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regal Hotels International vs. Magic Software Enterprises
Performance |
| Timeline |
| Regal Hotels Interna |
| Magic Software Enter |
Regal Hotels and Magic Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regal Hotels and Magic Software
The main advantage of trading using opposite Regal Hotels and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regal Hotels 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.| Regal Hotels vs. Magic Software Enterprises | Regal Hotels vs. MAGIC SOFTWARE ENTR | Regal Hotels vs. Silicon Motion Technology | Regal Hotels vs. CyberArk Software |
| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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