Correlation Between Check Point and Amcor Plc

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

Diversification Opportunities for Check Point and Amcor Plc

0.2

Correlation Coefficient

Check Point  Amcor Plc

Modest diversification

The 3 months correlation between Check and Amcor is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Amcor plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amcor plc 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 Amcor Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amcor plc has no effect on the direction of Check Point i.e., Check Point and Amcor Plc go up and down completely randomly.

Pair Corralation between Check Point and Amcor Plc

Assuming the 90 days trading horizon Check Point Software is expected to generate 0.57 times more return on investment than Amcor Plc. However, Check Point Software is 1.74 times less risky than Amcor Plc. It trades about 0.07 of its potential returns per unit of risk. Amcor plc is currently generating about 0.01 per unit of risk. If you would invest  11,626  in Check Point Software on October 23, 2024 and sell it today you would earn a total of  6,494  from holding Check Point Software or generate 55.86% return on investment over 90 days.

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

Check Point Software  vs.  Amcor plc

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 newest stock price disarray, may contribute to short-term losses for the investors.

Amcor plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amcor plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Amcor Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Check Point and Amcor Plc

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

The idea behind Check Point Software and Amcor plc 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.