Correlation Between MAGIC SOFTWARE and WuXi AppTec
Can any of the company-specific risk be diversified away by investing in both MAGIC SOFTWARE and WuXi AppTec 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 WuXi AppTec 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 WuXi AppTec Co, you can compare the effects of market volatilities on MAGIC SOFTWARE and WuXi AppTec 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 WuXi AppTec. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGIC SOFTWARE and WuXi AppTec.
Diversification Opportunities for MAGIC SOFTWARE and WuXi AppTec
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MAGIC and WuXi is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding MAGIC SOFTWARE ENTR and WuXi AppTec Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WuXi AppTec 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 WuXi AppTec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WuXi AppTec has no effect on the direction of MAGIC SOFTWARE i.e., MAGIC SOFTWARE and WuXi AppTec go up and down completely randomly.
Pair Corralation between MAGIC SOFTWARE and WuXi AppTec
Assuming the 90 days trading horizon MAGIC SOFTWARE is expected to generate 1.97 times less return on investment than WuXi AppTec. But when comparing it to its historical volatility, MAGIC SOFTWARE ENTR is 1.74 times less risky than WuXi AppTec. It trades about 0.08 of its potential returns per unit of risk. WuXi AppTec Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 685.00 in WuXi AppTec Co on December 28, 2024 and sell it today you would earn a total of 130.00 from holding WuXi AppTec Co or generate 18.98% 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. WuXi AppTec Co
Performance |
Timeline |
MAGIC SOFTWARE ENTR |
WuXi AppTec |
MAGIC SOFTWARE and WuXi AppTec Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MAGIC SOFTWARE and WuXi AppTec
The main advantage of trading using opposite MAGIC SOFTWARE and WuXi AppTec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAGIC SOFTWARE position performs unexpectedly, WuXi AppTec 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 WuXi AppTec will offset losses from the drop in WuXi AppTec's long position.MAGIC SOFTWARE vs. Meta Financial Group | MAGIC SOFTWARE vs. CarsalesCom | MAGIC SOFTWARE vs. GEELY AUTOMOBILE | MAGIC SOFTWARE vs. CHIBA BANK |
WuXi AppTec vs. Zurich Insurance Group | WuXi AppTec vs. Hanison Construction Holdings | WuXi AppTec vs. Universal Insurance Holdings | WuXi AppTec vs. The Hanover Insurance |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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