Correlation Between MAGIC SOFTWARE and Sqs Software

Can any of the company-specific risk be diversified away by investing in both MAGIC SOFTWARE and Sqs 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 MAGIC SOFTWARE and Sqs Software 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 Sqs Software Quality, you can compare the effects of market volatilities on MAGIC SOFTWARE and Sqs 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 MAGIC SOFTWARE with a short position of Sqs Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGIC SOFTWARE and Sqs Software.

Diversification Opportunities for MAGIC SOFTWARE and Sqs Software

0.21

Correlation Coefficient

MAGIC SOFTWARE  Sqs Software

Modest diversification

The 3 months correlation between MAGIC and Sqs is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding MAGIC SOFTWARE ENTR and Sqs Software Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sqs Software Quality 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 Sqs Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sqs Software Quality has no effect on the direction of MAGIC SOFTWARE i.e., MAGIC SOFTWARE and Sqs Software go up and down completely randomly.

Pair Corralation between MAGIC SOFTWARE and Sqs Software

Assuming the 90 days trading horizon MAGIC SOFTWARE is expected to generate 19.87 times less return on investment than Sqs Software. But when comparing it to its historical volatility, MAGIC SOFTWARE ENTR is 1.56 times less risky than Sqs Software. It trades about 0.01 of its potential returns per unit of risk. Sqs Software Quality is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  312.00  in Sqs Software Quality on December 2, 2024 and sell it today you would earn a total of  115.00  from holding Sqs Software Quality or generate 36.86% return on investment over 90 days.

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

MAGIC SOFTWARE ENTR  vs.  Sqs Software Quality

MAGIC SOFTWARE ENTR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MAGIC SOFTWARE ENTR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, MAGIC SOFTWARE is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Sqs Software Quality

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sqs Software Quality are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Sqs Software unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MAGIC SOFTWARE and Sqs Software

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

The idea behind MAGIC SOFTWARE ENTR and Sqs Software Quality 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.