Correlation Between Check Point and Amdocs

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

Diversification Opportunities for Check Point and Amdocs

0.16

Correlation Coefficient

Check Point  Amdocs

Average diversification

The 3 months correlation between Check and Amdocs is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Amdocs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amdocs 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 Amdocs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amdocs has no effect on the direction of Check Point i.e., Check Point and Amdocs go up and down completely randomly.

Pair Corralation between Check Point and Amdocs

Given the investment horizon of 90 days Check Point Software is expected to under-perform the Amdocs. In addition to that, Check Point is 1.91 times more volatile than Amdocs. It trades about -0.02 of its total potential returns per unit of risk. Amdocs is currently generating about 0.02 per unit of volatility. If you would invest  8,654  in Amdocs on September 4, 2024 and sell it today you would earn a total of  115.00  from holding Amdocs or generate 1.33% return on investment over 90 days.

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

Check Point Software  vs.  Amdocs

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. Even with relatively invariable forward-looking signals, Check Point is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Amdocs

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Amdocs are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Amdocs is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Check Point and Amdocs

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

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