Correlation Between PICKN PAY and MAGIC SOFTWARE

Can any of the company-specific risk be diversified away by investing in both PICKN PAY and MAGIC 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 PICKN PAY and MAGIC SOFTWARE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PICKN PAY STORES and MAGIC SOFTWARE ENTR, you can compare the effects of market volatilities on PICKN PAY and MAGIC 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 PICKN PAY with a short position of MAGIC SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of PICKN PAY and MAGIC SOFTWARE.

Diversification Opportunities for PICKN PAY and MAGIC SOFTWARE

0.81

Correlation Coefficient

PICKN PAY  MAGIC SOFTWARE

Very poor diversification

The 3 months correlation between PICKN and MAGIC is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding PICKN PAY STORES and MAGIC SOFTWARE ENTR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAGIC SOFTWARE ENTR and PICKN PAY 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 PICKN PAY STORES are associated (or correlated) with MAGIC SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAGIC SOFTWARE ENTR has no effect on the direction of PICKN PAY i.e., PICKN PAY and MAGIC SOFTWARE go up and down completely randomly.

Pair Corralation between PICKN PAY and MAGIC SOFTWARE

Assuming the 90 days trading horizon PICKN PAY STORES is expected to under-perform the MAGIC SOFTWARE. In addition to that, PICKN PAY is 1.19 times more volatile than MAGIC SOFTWARE ENTR. It trades about -0.02 of its total potential returns per unit of risk. MAGIC SOFTWARE ENTR is currently generating about 0.01 per unit of volatility. If you would invest  1,338  in MAGIC SOFTWARE ENTR on October 23, 2024 and sell it today you would lose (148.00) from holding MAGIC SOFTWARE ENTR or give up 11.06% of portfolio value over 90 days.

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

PICKN PAY STORES  vs.  MAGIC SOFTWARE ENTR

PICKN PAY STORES

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PICKN PAY STORES are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, PICKN PAY unveiled solid returns over the last few months and may actually be approaching a breakup point.

MAGIC SOFTWARE ENTR

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MAGIC SOFTWARE ENTR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, MAGIC SOFTWARE unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PICKN PAY and MAGIC SOFTWARE

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

The idea behind PICKN PAY STORES and MAGIC SOFTWARE ENTR 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..