Correlation Between Magic Software and Augwind Energy

Can any of the company-specific risk be diversified away by investing in both Magic Software and Augwind Energy 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 Augwind Energy 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 Augwind Energy Tech, you can compare the effects of market volatilities on Magic Software and Augwind Energy 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 Augwind Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and Augwind Energy.

Diversification Opportunities for Magic Software and Augwind Energy

-0.3

Correlation Coefficient

Magic Software  Augwind Energy

Very good diversification

The 3 months correlation between Magic and Augwind is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and Augwind Energy Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Augwind Energy Tech 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 Augwind Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Augwind Energy Tech has no effect on the direction of Magic Software i.e., Magic Software and Augwind Energy go up and down completely randomly.

Pair Corralation between Magic Software and Augwind Energy

Assuming the 90 days trading horizon Magic Software Enterprises is expected to generate 0.38 times more return on investment than Augwind Energy. However, Magic Software Enterprises is 2.64 times less risky than Augwind Energy. It trades about 0.43 of its potential returns per unit of risk. Augwind Energy Tech is currently generating about -0.04 per unit of risk. If you would invest  502,200  in Magic Software Enterprises on April 24, 2025 and sell it today you would earn a total of  213,700  from holding Magic Software Enterprises or generate 42.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.96%
Values	Daily Returns

Magic Software Enterprises  vs.  Augwind Energy Tech

Magic Software Enter

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Magic Software Enterprises are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Magic Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Augwind Energy Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Augwind Energy Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Magic Software and Augwind Energy

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

The idea behind Magic Software Enterprises and Augwind Energy Tech 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.