Correlation Between Magic Software and Kraft Heinz

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

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

Diversification Opportunities for Magic Software and Kraft Heinz

-0.46

Correlation Coefficient

Magic Software  Kraft Heinz

Very good diversification

The 3 months correlation between Magic and Kraft is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and Kraft Heinz Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraft Heinz and Magic Software 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 Magic Software Enterprises are associated (or correlated) with Kraft Heinz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraft Heinz has no effect on the direction of Magic Software i.e., Magic Software and Kraft Heinz go up and down completely randomly.

Pair Corralation between Magic Software and Kraft Heinz

Assuming the 90 days horizon Magic Software Enterprises is expected to generate 1.58 times more return on investment than Kraft Heinz. However, Magic Software is 1.58 times more volatile than Kraft Heinz Co. It trades about 0.06 of its potential returns per unit of risk. Kraft Heinz Co is currently generating about -0.02 per unit of risk. If you would invest  1,090  in Magic Software Enterprises on December 29, 2024 and sell it today you would earn a total of  100.00  from holding Magic Software Enterprises or generate 9.17% return on investment over 90 days.

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

Magic Software Enterprises  vs.  Kraft Heinz Co

Magic Software Enter

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Magic Software Enterprises are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Magic Software may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Kraft Heinz

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kraft Heinz Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Kraft Heinz is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Magic Software and Kraft Heinz

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

The idea behind Magic Software Enterprises and Kraft Heinz Co 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.

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.