Correlation Between MAGIC SOFTWARE and FIREWEED METALS

Can any of the company-specific risk be diversified away by investing in both MAGIC SOFTWARE and FIREWEED METALS 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 FIREWEED METALS 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 FIREWEED METALS P, you can compare the effects of market volatilities on MAGIC SOFTWARE and FIREWEED METALS 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 FIREWEED METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGIC SOFTWARE and FIREWEED METALS.

Diversification Opportunities for MAGIC SOFTWARE and FIREWEED METALS

0.49

Correlation Coefficient

MAGIC SOFTWARE  FIREWEED METALS

Very weak diversification

The 3 months correlation between MAGIC and FIREWEED is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding MAGIC SOFTWARE ENTR and FIREWEED METALS P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIREWEED METALS P 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 FIREWEED METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIREWEED METALS P has no effect on the direction of MAGIC SOFTWARE i.e., MAGIC SOFTWARE and FIREWEED METALS go up and down completely randomly.

Pair Corralation between MAGIC SOFTWARE and FIREWEED METALS

Assuming the 90 days trading horizon MAGIC SOFTWARE is expected to generate 1.6 times less return on investment than FIREWEED METALS. But when comparing it to its historical volatility, MAGIC SOFTWARE ENTR is 1.45 times less risky than FIREWEED METALS. It trades about 0.07 of its potential returns per unit of risk. FIREWEED METALS P is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  93.00  in FIREWEED METALS P on December 27, 2024 and sell it today you would earn a total of  13.00  from holding FIREWEED METALS P or generate 13.98% return on investment over 90 days.

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

MAGIC SOFTWARE ENTR  vs.  FIREWEED METALS P

MAGIC SOFTWARE ENTR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MAGIC SOFTWARE ENTR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, MAGIC SOFTWARE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

FIREWEED METALS P

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FIREWEED METALS P are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, FIREWEED METALS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MAGIC SOFTWARE and FIREWEED METALS

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

The idea behind MAGIC SOFTWARE ENTR and FIREWEED METALS P 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.