Correlation Between SPORTING and Magic Software
Can any of the company-specific risk be diversified away by investing in both SPORTING 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 SPORTING and Magic Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPORTING and Magic Software Enterprises, you can compare the effects of market volatilities on SPORTING 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 SPORTING with a short position of Magic Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPORTING and Magic Software.
Diversification Opportunities for SPORTING and Magic Software
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SPORTING and Magic is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding SPORTING 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 SPORTING 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 SPORTING 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 SPORTING i.e., SPORTING and Magic Software go up and down completely randomly.
Pair Corralation between SPORTING and Magic Software
Assuming the 90 days trading horizon SPORTING is expected to generate 2.07 times less return on investment than Magic Software. But when comparing it to its historical volatility, SPORTING is 1.97 times less risky than Magic Software. It trades about 0.13 of its potential returns per unit of risk. Magic Software Enterprises is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 935.00 in Magic Software Enterprises on September 12, 2024 and sell it today you would earn a total of 195.00 from holding Magic Software Enterprises or generate 20.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
SPORTING vs. Magic Software Enterprises
Performance |
| Timeline |
| SPORTING |
| Magic Software Enter |
SPORTING and Magic Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPORTING and Magic Software
The main advantage of trading using opposite SPORTING and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPORTING 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 SPORTING 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. Palo Alto Networks | Magic Software vs. HubSpot | Magic Software vs. Superior Plus Corp | Magic Software vs. SIVERS SEMICONDUCTORS AB |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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