Correlation Between Elmos Semiconductor and Magic Software

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

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

Diversification Opportunities for Elmos Semiconductor and Magic Software

0.33

Correlation Coefficient

Elmos Semiconductor  Magic Software

Weak diversification

The 3 months correlation between Elmos and Magic is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Elmos Semiconductor SE 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 Elmos Semiconductor 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 Elmos Semiconductor SE 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 Elmos Semiconductor i.e., Elmos Semiconductor and Magic Software go up and down completely randomly.

Pair Corralation between Elmos Semiconductor and Magic Software

Assuming the 90 days trading horizon Elmos Semiconductor is expected to generate 1.92 times less return on investment than Magic Software. In addition to that, Elmos Semiconductor is 1.38 times more volatile than Magic Software Enterprises. It trades about 0.04 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 Together
Strength	Very Weak
Accuracy	98.48%
Values	Daily Returns

Elmos Semiconductor SE  vs.  Magic Software Enterprises

Elmos Semiconductor

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Elmos Semiconductor SE are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Elmos Semiconductor may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Elmos Semiconductor and Magic Software

The main advantage of trading using opposite Elmos Semiconductor and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elmos Semiconductor 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 Elmos Semiconductor SE 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.