Correlation Between Check Point and AGR GROUP

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

Diversification Opportunities for Check Point and AGR GROUP

0.04

Correlation Coefficient

Check Point  AGR GROUP

Significant diversification

The 3 months correlation between Check and AGR is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and AGR GROUP A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGR GROUP A 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 AGR GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGR GROUP A has no effect on the direction of Check Point i.e., Check Point and AGR GROUP go up and down completely randomly.

Pair Corralation between Check Point and AGR GROUP

Assuming the 90 days trading horizon Check Point Software is expected to generate 1.2 times more return on investment than AGR GROUP. However, Check Point is 1.2 times more volatile than AGR GROUP A . It trades about 0.09 of its potential returns per unit of risk. AGR GROUP A is currently generating about 0.04 per unit of risk. If you would invest  11,470  in Check Point Software on October 24, 2024 and sell it today you would earn a total of  6,775  from holding Check Point Software or generate 59.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.75%
Values	Daily Returns

Check Point Software  vs.  AGR GROUP A

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 very healthy basic indicators, Check Point is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

AGR GROUP A

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AGR GROUP A are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, AGR GROUP is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Check Point and AGR GROUP

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

The idea behind Check Point Software and AGR GROUP A 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 Global Correlations module to find global opportunities by holding instruments from different markets.