Correlation Between Check Point and Catalyst Media

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

Diversification Opportunities for Check Point and Catalyst Media

-0.44

Correlation Coefficient

Check Point  Catalyst Media

Very good diversification

The 3 months correlation between Check and Catalyst is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Catalyst Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Media Group 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 Catalyst Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Media Group has no effect on the direction of Check Point i.e., Check Point and Catalyst Media go up and down completely randomly.

Pair Corralation between Check Point and Catalyst Media

Assuming the 90 days trading horizon Check Point Software is expected to generate 0.65 times more return on investment than Catalyst Media. However, Check Point Software is 1.54 times less risky than Catalyst Media. It trades about 0.11 of its potential returns per unit of risk. Catalyst Media Group is currently generating about -0.38 per unit of risk. 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 Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Check Point Software  vs.  Catalyst Media 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.

Catalyst Media Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catalyst Media Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Catalyst Media is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Check Point and Catalyst Media

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

The idea behind Check Point Software and Catalyst Media 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.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.