Correlation Between Check Point and Hardide PLC

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

Diversification Opportunities for Check Point and Hardide PLC

0.59

Correlation Coefficient

Check Point  Hardide PLC

Very weak diversification

The 3 months correlation between Check and Hardide is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Hardide PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hardide PLC 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 Hardide PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hardide PLC has no effect on the direction of Check Point i.e., Check Point and Hardide PLC go up and down completely randomly.

Pair Corralation between Check Point and Hardide PLC

Assuming the 90 days trading horizon Check Point Software is expected to under-perform the Hardide PLC. But the stock apears to be less risky and, when comparing its historical volatility, Check Point Software is 2.07 times less risky than Hardide PLC. The stock trades about -0.08 of its potential returns per unit of risk. The Hardide PLC is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  575.00  in Hardide PLC on October 10, 2024 and sell it today you would lose (12.00) from holding Hardide PLC or give up 2.09% of portfolio value over 90 days.

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

Check Point Software  vs.  Hardide PLC

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Hardide PLC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Check Point and Hardide PLC

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

The idea behind Check Point Software and Hardide PLC 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.