Correlation Between Check Point and Alkemy Capital

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

Diversification Opportunities for Check Point and Alkemy Capital

-0.62

Correlation Coefficient

Check Point  Alkemy Capital

Excellent diversification

The 3 months correlation between Check and Alkemy is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Alkemy Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alkemy Capital Inves 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 Alkemy Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alkemy Capital Inves has no effect on the direction of Check Point i.e., Check Point and Alkemy Capital go up and down completely randomly.

Pair Corralation between Check Point and Alkemy Capital

Assuming the 90 days trading horizon Check Point Software is expected to under-perform the Alkemy Capital. But the stock apears to be less risky and, when comparing its historical volatility, Check Point Software is 6.79 times less risky than Alkemy Capital. The stock trades about -0.02 of its potential returns per unit of risk. The Alkemy Capital Investments is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  3,750  in Alkemy Capital Investments on October 5, 2024 and sell it today you would earn a total of  9,000  from holding Alkemy Capital Investments or generate 240.0% return on investment over 90 days.

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

Check Point Software  vs.  Alkemy Capital Investments

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.

Alkemy Capital Inves

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alkemy Capital Investments are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Alkemy Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Check Point and Alkemy Capital

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

The idea behind Check Point Software and Alkemy Capital Investments 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 Transaction History module to view history of all your transactions and understand their impact on performance.