Correlation Between TOTAL GABON and MAGIC SOFTWARE
Can any of the company-specific risk be diversified away by investing in both TOTAL GABON 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 TOTAL GABON and MAGIC SOFTWARE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOTAL GABON and MAGIC SOFTWARE ENTR, you can compare the effects of market volatilities on TOTAL GABON 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 TOTAL GABON with a short position of MAGIC SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOTAL GABON and MAGIC SOFTWARE.
Diversification Opportunities for TOTAL GABON and MAGIC SOFTWARE
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TOTAL and MAGIC is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding TOTAL GABON and MAGIC SOFTWARE ENTR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAGIC SOFTWARE ENTR and TOTAL GABON 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 TOTAL GABON 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 ENTR has no effect on the direction of TOTAL GABON i.e., TOTAL GABON and MAGIC SOFTWARE go up and down completely randomly.
Pair Corralation between TOTAL GABON and MAGIC SOFTWARE
Assuming the 90 days trading horizon TOTAL GABON is expected to generate 1.3 times less return on investment than MAGIC SOFTWARE. But when comparing it to its historical volatility, TOTAL GABON is 1.0 times less risky than MAGIC SOFTWARE. It trades about 0.11 of its potential returns per unit of risk. MAGIC SOFTWARE ENTR is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 960.00 in MAGIC SOFTWARE ENTR on September 3, 2024 and sell it today you would earn a total of 240.00 from holding MAGIC SOFTWARE ENTR or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TOTAL GABON vs. MAGIC SOFTWARE ENTR
Performance |
| Timeline |
| TOTAL GABON |
| MAGIC SOFTWARE ENTR |
TOTAL GABON and MAGIC SOFTWARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOTAL GABON and MAGIC SOFTWARE
The main advantage of trading using opposite TOTAL GABON and MAGIC SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOTAL GABON 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.| TOTAL GABON vs. TOTAL BANGUN PERSAD | TOTAL GABON vs. TOTAL BANGUN PERSAD | TOTAL GABON vs. TOTAL ENERGY SERVS | TOTAL GABON vs. Anheuser Busch InBev SANV |
| MAGIC SOFTWARE vs. TOTAL GABON | MAGIC SOFTWARE vs. Walgreens Boots Alliance | MAGIC SOFTWARE vs. Peak Resources Limited |
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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