Correlation Between YH Dimri and Magic Software

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

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

Diversification Opportunities for YH Dimri and Magic Software

-0.58

Correlation Coefficient

YH Dimri  Magic Software

Excellent diversification

The 3 months correlation between DIMRI and Magic is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding YH Dimri Construction 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 YH Dimri 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 YH Dimri Construction 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 YH Dimri i.e., YH Dimri and Magic Software go up and down completely randomly.

Pair Corralation between YH Dimri and Magic Software

Assuming the 90 days trading horizon YH Dimri Construction is expected to under-perform the Magic Software. But the stock apears to be less risky and, when comparing its historical volatility, YH Dimri Construction is 1.5 times less risky than Magic Software. The stock trades about -0.17 of its potential returns per unit of risk. The Magic Software Enterprises is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  429,400  in Magic Software Enterprises on December 30, 2024 and sell it today you would earn a total of  58,700  from holding Magic Software Enterprises or generate 13.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

YH Dimri Construction  vs.  Magic Software Enterprises

YH Dimri Construction

Risk-Adjusted Performance

Very Weak

Over the last 90 days YH Dimri Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Magic Software Enter

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Magic Software Enterprises are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Magic Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with YH Dimri and Magic Software

The main advantage of trading using opposite YH Dimri and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YH Dimri 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 YH Dimri Construction 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.