Correlation Between Trucknet Enterprise and Magic Software

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

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

Diversification Opportunities for Trucknet Enterprise and Magic Software

0.48

Correlation Coefficient

Trucknet Enterprise  Magic Software

Very weak diversification

The 3 months correlation between Trucknet and Magic is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Trucknet Enterprise 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 Trucknet Enterprise 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 Trucknet Enterprise 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 Trucknet Enterprise i.e., Trucknet Enterprise and Magic Software go up and down completely randomly.

Pair Corralation between Trucknet Enterprise and Magic Software

Assuming the 90 days trading horizon Trucknet Enterprise is expected to generate 1.75 times more return on investment than Magic Software. However, Trucknet Enterprise is 1.75 times more volatile than Magic Software Enterprises. It trades about 0.17 of its potential returns per unit of risk. Magic Software Enterprises is currently generating about 0.07 per unit of risk. If you would invest  8,620  in Trucknet Enterprise on October 10, 2024 and sell it today you would earn a total of  3,000  from holding Trucknet Enterprise or generate 34.8% return on investment over 90 days.

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

Trucknet Enterprise  vs.  Magic Software Enterprises

Trucknet Enterprise

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Trucknet Enterprise are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Trucknet Enterprise sustained solid returns over the last few months and may actually be approaching a breakup point.

Magic Software Enter

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Magic Software Enterprises are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Magic Software may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Trucknet Enterprise and Magic Software

The main advantage of trading using opposite Trucknet Enterprise and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trucknet Enterprise 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 Trucknet Enterprise 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.

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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.