Correlation Between Check Point and Taoping

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

Diversification Opportunities for Check Point and Taoping

-0.73

Correlation Coefficient

Check Point  Taoping

Pay attention - limited upside

The 3 months correlation between Check and Taoping is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Taoping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taoping 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 Taoping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taoping has no effect on the direction of Check Point i.e., Check Point and Taoping go up and down completely randomly.

Pair Corralation between Check Point and Taoping

Given the investment horizon of 90 days Check Point Software is expected to generate 0.37 times more return on investment than Taoping. However, Check Point Software is 2.7 times less risky than Taoping. It trades about 0.2 of its potential returns per unit of risk. Taoping is currently generating about -0.17 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	Weak
Accuracy	100.0%
Values	Daily Returns

Check Point Software  vs.  Taoping

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.

Taoping

Risk-Adjusted Performance

Very Weak

Over the last 90 days Taoping has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Check Point and Taoping

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

The idea behind Check Point Software and Taoping 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.