Correlation Between SAITECH Global and Magic Empire

Can any of the company-specific risk be diversified away by investing in both SAITECH Global and Magic Empire 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 SAITECH Global and Magic Empire into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SAITECH Global and Magic Empire Global, you can compare the effects of market volatilities on SAITECH Global and Magic Empire 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 SAITECH Global with a short position of Magic Empire. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAITECH Global and Magic Empire.

Diversification Opportunities for SAITECH Global and Magic Empire

-0.35

Correlation Coefficient

SAITECH Global  Magic Empire

Very good diversification

The 3 months correlation between SAITECH and Magic is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding SAITECH Global and Magic Empire Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magic Empire Global and SAITECH Global 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 SAITECH Global are associated (or correlated) with Magic Empire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magic Empire Global has no effect on the direction of SAITECH Global i.e., SAITECH Global and Magic Empire go up and down completely randomly.

Pair Corralation between SAITECH Global and Magic Empire

Considering the 90-day investment horizon SAITECH Global is expected to under-perform the Magic Empire. But the stock apears to be less risky and, when comparing its historical volatility, SAITECH Global is 1.57 times less risky than Magic Empire. The stock trades about -0.09 of its potential returns per unit of risk. The Magic Empire Global is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  44.00  in Magic Empire Global on September 2, 2024 and sell it today you would earn a total of  9.00  from holding Magic Empire Global or generate 20.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	29.69%
Values	Daily Returns

SAITECH Global  vs.  Magic Empire Global

SAITECH Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SAITECH Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Magic Empire Global

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Magic Empire Global are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, Magic Empire disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SAITECH Global and Magic Empire

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

The idea behind SAITECH Global and Magic Empire Global 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.