Correlation Between MAGIC SOFTWARE and East Japan
Can any of the company-specific risk be diversified away by investing in both MAGIC SOFTWARE and East Japan 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 East Japan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MAGIC SOFTWARE ENTR and East Japan Railway, you can compare the effects of market volatilities on MAGIC SOFTWARE and East Japan 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 East Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGIC SOFTWARE and East Japan.
Diversification Opportunities for MAGIC SOFTWARE and East Japan
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MAGIC and East is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding MAGIC SOFTWARE ENTR and East Japan Railway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Japan Railway 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 ENTR are associated (or correlated) with East Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Japan Railway has no effect on the direction of MAGIC SOFTWARE i.e., MAGIC SOFTWARE and East Japan go up and down completely randomly.
Pair Corralation between MAGIC SOFTWARE and East Japan
Assuming the 90 days trading horizon MAGIC SOFTWARE ENTR is expected to generate 1.22 times more return on investment than East Japan. However, MAGIC SOFTWARE is 1.22 times more volatile than East Japan Railway. It trades about 0.1 of its potential returns per unit of risk. East Japan Railway is currently generating about 0.05 per unit of risk. If you would invest 861.00 in MAGIC SOFTWARE ENTR on September 26, 2024 and sell it today you would earn a total of 259.00 from holding MAGIC SOFTWARE ENTR or generate 30.08% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
MAGIC SOFTWARE ENTR vs. East Japan Railway
Performance |
Timeline |
MAGIC SOFTWARE ENTR |
East Japan Railway |
MAGIC SOFTWARE and East Japan Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MAGIC SOFTWARE and East Japan
The main advantage of trading using opposite MAGIC SOFTWARE and East Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAGIC SOFTWARE position performs unexpectedly, East Japan 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 East Japan will offset losses from the drop in East Japan's long position.MAGIC SOFTWARE vs. Apple Inc | MAGIC SOFTWARE vs. Apple Inc | MAGIC SOFTWARE vs. Microsoft | MAGIC SOFTWARE vs. Microsoft |
East Japan vs. MAGIC SOFTWARE ENTR | East Japan vs. MCEWEN MINING INC | East Japan vs. Perseus Mining Limited | East Japan vs. CPU SOFTWAREHOUSE |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Fundamental Analysis View fundamental data based on most recent published financial statements |