Correlation Between ANGANG STEEL and Magic Software

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

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

Diversification Opportunities for ANGANG STEEL and Magic Software

0.17

Correlation Coefficient

ANGANG STEEL  Magic Software

Average diversification

The 3 months correlation between ANGANG and Magic is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding ANGANG STEEL H 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 ANGANG STEEL 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 ANGANG STEEL H 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 ANGANG STEEL i.e., ANGANG STEEL and Magic Software go up and down completely randomly.

Pair Corralation between ANGANG STEEL and Magic Software

Assuming the 90 days trading horizon ANGANG STEEL H is expected to under-perform the Magic Software. In addition to that, ANGANG STEEL is 1.46 times more volatile than Magic Software Enterprises. It trades about -0.09 of its total potential returns per unit of risk. Magic Software Enterprises is currently generating about 0.07 per unit of volatility. If you would invest  1,106  in Magic Software Enterprises on October 9, 2024 and sell it today you would earn a total of  24.00  from holding Magic Software Enterprises or generate 2.17% return on investment over 90 days.

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

ANGANG STEEL H   vs.  Magic Software Enterprises

ANGANG STEEL H

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ANGANG STEEL H are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ANGANG STEEL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Magic Software Enter

Risk-Adjusted Performance

8 of 100

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 nearly fragile basic indicators, Magic Software reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ANGANG STEEL and Magic Software

The main advantage of trading using opposite ANGANG STEEL and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ANGANG STEEL 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 ANGANG STEEL H 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.