Correlation Between Check Point and Alior Bank

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

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

Diversification Opportunities for Check Point and Alior Bank

-0.09

Correlation Coefficient

Check Point  Alior Bank

Good diversification

The 3 months correlation between Check and Alior is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Alior Bank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alior Bank SA and Check Point 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 Check Point Software are associated (or correlated) with Alior Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alior Bank SA has no effect on the direction of Check Point i.e., Check Point and Alior Bank go up and down completely randomly.

Pair Corralation between Check Point and Alior Bank

Assuming the 90 days trading horizon Check Point is expected to generate 1.55 times less return on investment than Alior Bank. But when comparing it to its historical volatility, Check Point Software is 1.6 times less risky than Alior Bank. It trades about 0.02 of its potential returns per unit of risk. Alior Bank SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  7,950  in Alior Bank SA on September 18, 2024 and sell it today you would earn a total of  0.00  from holding Alior Bank SA or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Check Point Software  vs.  Alior Bank SA

Check Point Software

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Check Point Software are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Check Point is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Alior Bank SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alior Bank SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Alior Bank 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 Check Point and Alior Bank

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

The idea behind Check Point Software and Alior Bank SA 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.