Correlation Between Shagrir Group and Magic Software

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

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

Diversification Opportunities for Shagrir Group and Magic Software

0.44

Correlation Coefficient

Shagrir Group  Magic Software

Very weak diversification

The 3 months correlation between Shagrir and Magic is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Shagrir Group Vehicle and Magic Software Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magic Software Enter and Shagrir Group 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 Shagrir Group Vehicle 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 Enter has no effect on the direction of Shagrir Group i.e., Shagrir Group and Magic Software go up and down completely randomly.

Pair Corralation between Shagrir Group and Magic Software

Assuming the 90 days trading horizon Shagrir Group Vehicle is expected to generate 1.01 times more return on investment than Magic Software. However, Shagrir Group is 1.01 times more volatile than Magic Software Enterprises. It trades about 0.0 of its potential returns per unit of risk. Magic Software Enterprises is currently generating about -0.01 per unit of risk. If you would invest  131,000  in Shagrir Group Vehicle on September 4, 2024 and sell it today you would lose (13,200) from holding Shagrir Group Vehicle or give up 10.08% of portfolio value over 90 days.

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

Shagrir Group Vehicle  vs.  Magic Software Enterprises

Shagrir Group Vehicle

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shagrir Group Vehicle are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shagrir Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Magic Software Enter

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Magic Software Enterprises are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Magic Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shagrir Group and Magic Software

The main advantage of trading using opposite Shagrir Group and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shagrir Group 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 Shagrir Group Vehicle and Magic Software Enterprises 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.