Correlation Between Check Point and AcadeMedia

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

Diversification Opportunities for Check Point and AcadeMedia

0.25

Correlation Coefficient

Check Point  AcadeMedia

Modest diversification

The 3 months correlation between Check and AcadeMedia is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and AcadeMedia AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AcadeMedia AB 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 AcadeMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AcadeMedia AB has no effect on the direction of Check Point i.e., Check Point and AcadeMedia go up and down completely randomly.

Pair Corralation between Check Point and AcadeMedia

Assuming the 90 days trading horizon Check Point Software is expected to under-perform the AcadeMedia. In addition to that, Check Point is 1.46 times more volatile than AcadeMedia AB. It trades about 0.0 of its total potential returns per unit of risk. AcadeMedia AB is currently generating about 0.04 per unit of volatility. If you would invest  6,552  in AcadeMedia AB on September 29, 2024 and sell it today you would earn a total of  183.00  from holding AcadeMedia AB or generate 2.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Check Point Software  vs.  AcadeMedia AB

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

AcadeMedia AB

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AcadeMedia AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, AcadeMedia 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 AcadeMedia

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

The idea behind Check Point Software and AcadeMedia AB 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.