Correlation Between Magic Software and CSP
Can any of the company-specific risk be diversified away by investing in both Magic Software and CSP 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 CSP 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 CSP Inc, you can compare the effects of market volatilities on Magic Software and CSP 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 CSP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and CSP.
Diversification Opportunities for Magic Software and CSP
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Magic and CSP is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and CSP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSP Inc 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 CSP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSP Inc has no effect on the direction of Magic Software i.e., Magic Software and CSP go up and down completely randomly.
Pair Corralation between Magic Software and CSP
Given the investment horizon of 90 days Magic Software is expected to generate 1.75 times less return on investment than CSP. But when comparing it to its historical volatility, Magic Software Enterprises is 2.24 times less risky than CSP. It trades about 0.06 of its potential returns per unit of risk. CSP Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 640.00 in CSP Inc on April 26, 2025 and sell it today you would earn a total of 469.50 from holding CSP Inc or generate 73.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magic Software Enterprises vs. CSP Inc
Performance |
| Timeline |
| Magic Software Enter |
| CSP Inc |
Magic Software and CSP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and CSP
The main advantage of trading using opposite Magic Software and CSP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, CSP 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 CSP will offset losses from the drop in CSP's long position.| Magic Software vs. Formula Systems 1985 | Magic Software vs. Nayax | Magic Software vs. The Hackett Group | Magic Software vs. Information Services Group |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |