Correlation Between Magic Software and CLPS

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

Diversification Opportunities for Magic Software and CLPS

-0.32

Correlation Coefficient

Magic Software  CLPS

Very good diversification

The 3 months correlation between Magic and CLPS is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and CLPS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLPS 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 CLPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLPS Inc has no effect on the direction of Magic Software i.e., Magic Software and CLPS go up and down completely randomly.

Pair Corralation between Magic Software and CLPS

Given the investment horizon of 90 days Magic Software Enterprises is expected to generate 0.82 times more return on investment than CLPS. However, Magic Software Enterprises is 1.22 times less risky than CLPS. It trades about 0.29 of its potential returns per unit of risk. CLPS Inc is currently generating about -0.01 per unit of risk. If you would invest  1,387  in Magic Software Enterprises on May 1, 2025 and sell it today you would earn a total of  692.00  from holding Magic Software Enterprises or generate 49.89% 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.  CLPS Inc

Magic Software Enter

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Magic Software Enterprises are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward indicators, Magic Software exhibited solid returns over the last few months and may actually be approaching a breakup point.

CLPS Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days CLPS Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CLPS is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Magic Software and CLPS

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

The idea behind Magic Software Enterprises and CLPS Inc 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.