Correlation Between Kinnevik Investment and Check Point

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

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

Diversification Opportunities for Kinnevik Investment and Check Point

0.21

Correlation Coefficient

Kinnevik Investment  Check Point

Modest diversification

The 3 months correlation between Kinnevik and Check is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Kinnevik Investment AB 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 Kinnevik Investment 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 Kinnevik Investment AB 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 Kinnevik Investment i.e., Kinnevik Investment and Check Point go up and down completely randomly.

Pair Corralation between Kinnevik Investment and Check Point

Assuming the 90 days trading horizon Kinnevik Investment AB is expected to under-perform the Check Point. In addition to that, Kinnevik Investment is 1.22 times more volatile than Check Point Software. It trades about -0.07 of its total potential returns per unit of risk. Check Point Software is currently generating about 0.11 per unit of volatility. If you would invest  18,180  in Check Point Software on September 22, 2024 and sell it today you would earn a total of  513.00  from holding Check Point Software or generate 2.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Kinnevik Investment AB  vs.  Check Point Software

Kinnevik Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinnevik Investment AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Check Point Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Check Point Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Check Point 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 Kinnevik Investment and Check Point

The main advantage of trading using opposite Kinnevik Investment and Check Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinnevik Investment 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 Kinnevik Investment AB 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.