Correlation Between Coor Service and Magic Software

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

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

Diversification Opportunities for Coor Service and Magic Software

-0.58

Correlation Coefficient

Coor Service  Magic Software

Excellent diversification

The 3 months correlation between Coor and Magic is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Coor Service Management 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 Coor Service 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 Coor Service Management 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 Coor Service i.e., Coor Service and Magic Software go up and down completely randomly.

Pair Corralation between Coor Service and Magic Software

Assuming the 90 days horizon Coor Service Management is expected to under-perform the Magic Software. In addition to that, Coor Service is 1.24 times more volatile than Magic Software Enterprises. It trades about -0.08 of its total potential returns per unit of risk. Magic Software Enterprises is currently generating about 0.1 per unit of volatility. If you would invest  985.00  in Magic Software Enterprises on September 24, 2024 and sell it today you would earn a total of  135.00  from holding Magic Software Enterprises or generate 13.71% return on investment over 90 days.

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

Coor Service Management  vs.  Magic Software Enterprises

Coor Service Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coor Service Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Magic Software Enter

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Magic Software Enterprises are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Magic Software reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coor Service and Magic Software

The main advantage of trading using opposite Coor Service and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coor Service 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 Coor Service Management 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.