Correlation Between Check Point and Secure Property

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

Diversification Opportunities for Check Point and Secure Property

-0.01

Correlation Coefficient

Check Point  Secure Property

Good diversification

The 3 months correlation between Check and Secure is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Secure Property Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Secure Property Deve 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 Secure Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Secure Property Deve has no effect on the direction of Check Point i.e., Check Point and Secure Property go up and down completely randomly.

Pair Corralation between Check Point and Secure Property

Assuming the 90 days trading horizon Check Point Software is expected to generate 1.24 times more return on investment than Secure Property. However, Check Point is 1.24 times more volatile than Secure Property Development. It trades about 0.07 of its potential returns per unit of risk. Secure Property Development is currently generating about 0.01 per unit of risk. If you would invest  16,471  in Check Point Software on September 27, 2024 and sell it today you would earn a total of  2,562  from holding Check Point Software or generate 15.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

Check Point Software  vs.  Secure Property Development

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.

Secure Property Deve

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Secure Property Development has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady 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.

Pair Trading with Check Point and Secure Property

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

The idea behind Check Point Software and Secure Property Development 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.