Correlation Between Check Point and Triad Group

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

Diversification Opportunities for Check Point and Triad Group

0.06

Correlation Coefficient

Check Point  Triad Group

Significant diversification

The 3 months correlation between Check and Triad is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Triad Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triad Group 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 Triad Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triad Group PLC has no effect on the direction of Check Point i.e., Check Point and Triad Group go up and down completely randomly.

Pair Corralation between Check Point and Triad Group

Assuming the 90 days trading horizon Check Point Software is expected to under-perform the Triad Group. In addition to that, Check Point is 1.15 times more volatile than Triad Group PLC. It trades about -0.04 of its total potential returns per unit of risk. Triad Group PLC is currently generating about 0.12 per unit of volatility. If you would invest  30,312  in Triad Group PLC on October 26, 2024 and sell it today you would earn a total of  4,188  from holding Triad Group PLC or generate 13.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Check Point Software  vs.  Triad Group 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 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.

Triad Group PLC

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Triad Group PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Triad Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Check Point and Triad Group

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

The idea behind Check Point Software and Triad Group 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.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.