Correlation Between Check Point and Qualys

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

Diversification Opportunities for Check Point and Qualys

-0.41

Correlation Coefficient

Check Point  Qualys

Very good diversification

The 3 months correlation between Check and Qualys is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Qualys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qualys Inc 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 Qualys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qualys Inc has no effect on the direction of Check Point i.e., Check Point and Qualys go up and down completely randomly.

Pair Corralation between Check Point and Qualys

Given the investment horizon of 90 days Check Point Software is expected to generate 0.94 times more return on investment than Qualys. However, Check Point Software is 1.06 times less risky than Qualys. It trades about 0.2 of its potential returns per unit of risk. Qualys Inc is currently generating about -0.08 per unit of risk. If you would invest  18,726  in Check Point Software on December 28, 2024 and sell it today you would earn a total of  4,111  from holding Check Point Software or generate 21.95% return on investment over 90 days.

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

Check Point Software  vs.  Qualys Inc

Check Point Software

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Check Point Software are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady forward-looking signals, Check Point reported solid returns over the last few months and may actually be approaching a breakup point.

Qualys Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Qualys Inc 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 Qualys

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

The idea behind Check Point Software and Qualys Inc 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.