Correlation Between Magic Software and Suny Cellular

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

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

Diversification Opportunities for Magic Software and Suny Cellular

0.58

Correlation Coefficient

Magic Software  Suny Cellular

Very weak diversification

The 3 months correlation between Magic and Suny is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and Suny Cellular Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suny Cellular Commun and Magic Software 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 Magic Software Enterprises are associated (or correlated) with Suny Cellular. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suny Cellular Commun has no effect on the direction of Magic Software i.e., Magic Software and Suny Cellular go up and down completely randomly.

Pair Corralation between Magic Software and Suny Cellular

Assuming the 90 days trading horizon Magic Software is expected to generate 3.77 times less return on investment than Suny Cellular. In addition to that, Magic Software is 1.11 times more volatile than Suny Cellular Communication. It trades about 0.06 of its total potential returns per unit of risk. Suny Cellular Communication is currently generating about 0.25 per unit of volatility. If you would invest  9,989  in Suny Cellular Communication on September 27, 2024 and sell it today you would earn a total of  2,241  from holding Suny Cellular Communication or generate 22.43% return on investment over 90 days.

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

Magic Software Enterprises  vs.  Suny Cellular Communication

Magic Software Enter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Magic Software Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Magic Software is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Suny Cellular Commun

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Suny Cellular Communication are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Suny Cellular sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Magic Software and Suny Cellular

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

The idea behind Magic Software Enterprises and Suny Cellular Communication 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.