Correlation Between CAREER EDUCATION and Magic Software

Can any of the company-specific risk be diversified away by investing in both CAREER EDUCATION 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 CAREER EDUCATION and Magic Software into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CAREER EDUCATION and Magic Software Enterprises, you can compare the effects of market volatilities on CAREER EDUCATION 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 CAREER EDUCATION with a short position of Magic Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAREER EDUCATION and Magic Software.

Diversification Opportunities for CAREER EDUCATION and Magic Software

0.16

Correlation Coefficient

CAREER EDUCATION  Magic Software

Average diversification

The 3 months correlation between CAREER and Magic is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding CAREER EDUCATION 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 CAREER EDUCATION 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 CAREER EDUCATION 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 CAREER EDUCATION i.e., CAREER EDUCATION and Magic Software go up and down completely randomly.

Pair Corralation between CAREER EDUCATION and Magic Software

Assuming the 90 days trading horizon CAREER EDUCATION is expected to under-perform the Magic Software. But the stock apears to be less risky and, when comparing its historical volatility, CAREER EDUCATION is 1.73 times less risky than Magic Software. The stock trades about -0.09 of its potential returns per unit of risk. The Magic Software Enterprises is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,120  in Magic Software Enterprises on December 22, 2024 and sell it today you would earn a total of  150.00  from holding Magic Software Enterprises or generate 13.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CAREER EDUCATION  vs.  Magic Software Enterprises

CAREER EDUCATION

Risk-Adjusted Performance

Very Weak

Over the last 90 days CAREER EDUCATION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Magic Software Enter

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Magic Software Enterprises are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Magic Software reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CAREER EDUCATION and Magic Software

The main advantage of trading using opposite CAREER EDUCATION and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAREER EDUCATION 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 CAREER EDUCATION 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.