Correlation Between SoftBank Group and Check Point

Can any of the company-specific risk be diversified away by investing in both SoftBank Group and Check Point 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 SoftBank Group and Check Point into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SoftBank Group Corp and Check Point Software, you can compare the effects of market volatilities on SoftBank Group and Check Point 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 SoftBank Group with a short position of Check Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoftBank Group and Check Point.

Diversification Opportunities for SoftBank Group and Check Point

0.56

Correlation Coefficient

SoftBank Group  Check Point

Very weak diversification

The 3 months correlation between SoftBank and Check is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding SoftBank Group Corp and Check Point Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Check Point Software and SoftBank Group 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 SoftBank Group Corp are associated (or correlated) with Check Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Check Point Software has no effect on the direction of SoftBank Group i.e., SoftBank Group and Check Point go up and down completely randomly.

Pair Corralation between SoftBank Group and Check Point

Assuming the 90 days trading horizon SoftBank Group is expected to generate 9.29 times less return on investment than Check Point. In addition to that, SoftBank Group is 2.27 times more volatile than Check Point Software. It trades about 0.01 of its total potential returns per unit of risk. Check Point Software is currently generating about 0.21 per unit of volatility. If you would invest  18,202  in Check Point Software on December 1, 2024 and sell it today you would earn a total of  3,583  from holding Check Point Software or generate 19.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	71.67%
Values	Daily Returns

SoftBank Group Corp  vs.  Check Point Software

SoftBank Group Corp

Risk-Adjusted Performance

Very Weak

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

Check Point Software

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Check Point Software are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Check Point unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SoftBank Group and Check Point

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

The idea behind SoftBank Group Corp and Check Point Software 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.