Can any of the company-specific risk be diversified away by investing in both MIRAMAR HOTEL 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 MIRAMAR HOTEL and Magic Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MIRAMAR HOTEL INV and Magic Software Enterprises, you can compare the effects of market volatilities on MIRAMAR HOTEL 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 MIRAMAR HOTEL with a short position of Magic Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of MIRAMAR HOTEL and Magic Software.
Diversification Opportunities for MIRAMAR HOTEL and Magic Software
The 3 months correlation between MIRAMAR and Magic is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding MIRAMAR HOTEL INV 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 MIRAMAR HOTEL 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 MIRAMAR HOTEL INV 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 MIRAMAR HOTEL i.e., MIRAMAR HOTEL and Magic Software go up and down completely randomly.
Pair Corralation between MIRAMAR HOTEL and Magic Software
Assuming the 90 days trading horizon MIRAMAR HOTEL INV is expected to generate 0.19 times more return on investment than Magic Software. However, MIRAMAR HOTEL INV is 5.15 times less risky than Magic Software. It trades about 0.0 of its potential returns per unit of risk. Magic Software Enterprises is currently generating about -0.15 per unit of risk. If you would invest 119.00 in MIRAMAR HOTEL INV on March 6, 2024 and sell it today you would earn a total of 0.00 from holding MIRAMAR HOTEL INV or generate 0.0% return on investment over 90 days.
Over the last 90 days MIRAMAR HOTEL INV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, MIRAMAR HOTEL is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.
Over the last 90 days Magic Software Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Magic Software is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.