Correlation Between TAT Technologies and Magic Software
Can any of the company-specific risk be diversified away by investing in both TAT Technologies 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 TAT Technologies and Magic Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TAT Technologies and Magic Software Enterprises, you can compare the effects of market volatilities on TAT Technologies 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 TAT Technologies with a short position of Magic Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of TAT Technologies and Magic Software.
Diversification Opportunities for TAT Technologies and Magic Software
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TAT and Magic is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding TAT Technologies 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 TAT Technologies 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 TAT Technologies 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 TAT Technologies i.e., TAT Technologies and Magic Software go up and down completely randomly.
Pair Corralation between TAT Technologies and Magic Software
Assuming the 90 days trading horizon TAT Technologies is expected to generate 0.91 times more return on investment than Magic Software. However, TAT Technologies is 1.1 times less risky than Magic Software. It trades about 0.17 of its potential returns per unit of risk. Magic Software Enterprises is currently generating about -0.01 per unit of risk. If you would invest 202,700 in TAT Technologies on September 3, 2024 and sell it today you would earn a total of 621,300 from holding TAT Technologies or generate 306.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TAT Technologies vs. Magic Software Enterprises
Performance |
| Timeline |
| TAT Technologies |
| Magic Software Enter |
TAT Technologies and Magic Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TAT Technologies and Magic Software
The main advantage of trading using opposite TAT Technologies and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TAT Technologies 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.| TAT Technologies vs. Bet Shemesh Engines | TAT Technologies vs. Orbit Technologies | TAT Technologies vs. Tower Semiconductor | TAT Technologies vs. Elron Electronic Industries |
| Magic Software vs. Sapiens International | Magic Software vs. AudioCodes | Magic Software vs. Matrix | Magic Software vs. Tower Semiconductor |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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