Correlation Between Check Point and KIMBALL ELECTRONICS

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

Diversification Opportunities for Check Point and KIMBALL ELECTRONICS

-0.34

Correlation Coefficient

Check Point  KIMBALL ELECTRONICS

Very good diversification

The 3 months correlation between Check and KIMBALL is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and KIMBALL ELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KIMBALL ELECTRONICS has no effect on the direction of Check Point i.e., Check Point and KIMBALL ELECTRONICS go up and down completely randomly.

Pair Corralation between Check Point and KIMBALL ELECTRONICS

Assuming the 90 days trading horizon Check Point Software is expected to generate 0.41 times more return on investment than KIMBALL ELECTRONICS. However, Check Point Software is 2.45 times less risky than KIMBALL ELECTRONICS. It trades about 0.24 of its potential returns per unit of risk. KIMBALL ELECTRONICS is currently generating about 0.07 per unit of risk. If you would invest  15,640  in Check Point Software on October 6, 2024 and sell it today you would earn a total of  2,150  from holding Check Point Software or generate 13.75% return on investment over 90 days.

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

Check Point Software  vs.  KIMBALL ELECTRONICS

Check Point Software

Risk-Adjusted Performance

1 of 100

Weak

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

KIMBALL ELECTRONICS

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KIMBALL ELECTRONICS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, KIMBALL ELECTRONICS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Check Point and KIMBALL ELECTRONICS

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

The idea behind Check Point Software and KIMBALL ELECTRONICS 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.