Correlation Between Magna International and Asure Software

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

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

Diversification Opportunities for Magna International and Asure Software

0.38

Correlation Coefficient

Magna International  Asure Software

Weak diversification

The 3 months correlation between Magna and Asure is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and Asure Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asure Software and Magna International 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 Magna International are associated (or correlated) with Asure Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asure Software has no effect on the direction of Magna International i.e., Magna International and Asure Software go up and down completely randomly.

Pair Corralation between Magna International and Asure Software

Considering the 90-day investment horizon Magna International is expected to under-perform the Asure Software. But the stock apears to be less risky and, when comparing its historical volatility, Magna International is 1.43 times less risky than Asure Software. The stock trades about -0.03 of its potential returns per unit of risk. The Asure Software is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  751.00  in Asure Software on September 24, 2024 and sell it today you would earn a total of  161.00  from holding Asure Software or generate 21.44% return on investment over 90 days.

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

Magna International  vs.  Asure Software

Magna International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Magna International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Magna International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Asure Software

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Asure Software are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Asure Software is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Magna International and Asure Software

The main advantage of trading using opposite Magna International and Asure Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna International position performs unexpectedly, Asure 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 Asure Software will offset losses from the drop in Asure Software's long position.

The idea behind Magna International and Asure Software 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.