Correlation Between BW OFFSHORE and Magic Software
Can any of the company-specific risk be diversified away by investing in both BW OFFSHORE 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 BW OFFSHORE and Magic Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW OFFSHORE LTD and Magic Software Enterprises, you can compare the effects of market volatilities on BW OFFSHORE 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 BW OFFSHORE with a short position of Magic Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW OFFSHORE and Magic Software.
Diversification Opportunities for BW OFFSHORE and Magic Software
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between XY81 and Magic is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding BW OFFSHORE LTD 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 BW OFFSHORE 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 BW OFFSHORE LTD 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 BW OFFSHORE i.e., BW OFFSHORE and Magic Software go up and down completely randomly.
Pair Corralation between BW OFFSHORE and Magic Software
Assuming the 90 days trading horizon BW OFFSHORE LTD is expected to under-perform the Magic Software. But the stock apears to be less risky and, when comparing its historical volatility, BW OFFSHORE LTD is 1.1 times less risky than Magic Software. The stock trades about 0.0 of its potential returns per unit of risk. The Magic Software Enterprises is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 928.00 in Magic Software Enterprises on September 1, 2024 and sell it today you would earn a total of 172.00 from holding Magic Software Enterprises or generate 18.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BW OFFSHORE LTD vs. Magic Software Enterprises
Performance |
| Timeline |
| BW OFFSHORE LTD |
| Magic Software Enter |
BW OFFSHORE and Magic Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW OFFSHORE and Magic Software
The main advantage of trading using opposite BW OFFSHORE and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW OFFSHORE 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.| BW OFFSHORE vs. Zurich Insurance Group | BW OFFSHORE vs. NIPPON MEAT PACKERS | BW OFFSHORE vs. PT Indofood Sukses | BW OFFSHORE vs. JJ SNACK FOODS |
| 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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