Correlation Between Magic Software and Informatica

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

Diversification Opportunities for Magic Software and Informatica

-0.31

Correlation Coefficient

Magic Software  Informatica

Very good diversification

The 3 months correlation between Magic and Informatica is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and Informatica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Informatica 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 Informatica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Informatica has no effect on the direction of Magic Software i.e., Magic Software and Informatica go up and down completely randomly.

Pair Corralation between Magic Software and Informatica

Given the investment horizon of 90 days Magic Software Enterprises is expected to under-perform the Informatica. In addition to that, Magic Software is 13.97 times more volatile than Informatica. It trades about 0.0 of its total potential returns per unit of risk. Informatica is currently generating about 0.13 per unit of volatility. If you would invest  2,451  in Informatica on July 20, 2025 and sell it today you would earn a total of  32.00  from holding Informatica or generate 1.31% return on investment over 90 days.

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

Magic Software Enterprises  vs.  Informatica

Magic Software Enter

Risk-Adjusted Performance

Weakest

Over the last 90 days Magic Software Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Magic Software is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Informatica

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Informatica are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Informatica is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Magic Software and Informatica

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

The idea behind Magic Software Enterprises and Informatica 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.