Correlation Between Check Point and Aptitude Software

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

Diversification Opportunities for Check Point and Aptitude Software

-0.13

Correlation Coefficient

Check Point  Aptitude Software

Good diversification

The 3 months correlation between Check and Aptitude is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Aptitude Software Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptitude Software 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 Aptitude Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptitude Software has no effect on the direction of Check Point i.e., Check Point and Aptitude Software go up and down completely randomly.

Pair Corralation between Check Point and Aptitude Software

Assuming the 90 days trading horizon Check Point Software is expected to under-perform the Aptitude Software. In addition to that, Check Point is 1.11 times more volatile than Aptitude Software Group. It trades about -0.04 of its total potential returns per unit of risk. Aptitude Software Group is currently generating about 0.01 per unit of volatility. If you would invest  33,400  in Aptitude Software Group on October 8, 2024 and sell it today you would earn a total of  0.00  from holding Aptitude Software Group or generate 0.0% return on investment over 90 days.

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

Check Point Software  vs.  Aptitude Software Group

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.

Aptitude Software

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Check Point Software and Aptitude Software Group 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.