Correlation Between Check Point and SCIENCE IN

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

Diversification Opportunities for Check Point and SCIENCE IN

0.58

Correlation Coefficient

Check Point  SCIENCE IN

Very weak diversification

The 3 months correlation between Check and SCIENCE is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and SCIENCE IN SPORT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCIENCE IN SPORT 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 SCIENCE IN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCIENCE IN SPORT has no effect on the direction of Check Point i.e., Check Point and SCIENCE IN go up and down completely randomly.

Pair Corralation between Check Point and SCIENCE IN

Assuming the 90 days trading horizon Check Point Software is expected to generate 0.74 times more return on investment than SCIENCE IN. However, Check Point Software is 1.36 times less risky than SCIENCE IN. It trades about 0.17 of its potential returns per unit of risk. SCIENCE IN SPORT is currently generating about 0.06 per unit of risk. If you would invest  17,885  in Check Point Software on December 29, 2024 and sell it today you would earn a total of  3,265  from holding Check Point Software or generate 18.26% return on investment over 90 days.

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

Check Point Software  vs.  SCIENCE IN SPORT

Check Point Software

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Check Point Software are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Check Point displayed solid returns over the last few months and may actually be approaching a breakup point.

SCIENCE IN SPORT

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SCIENCE IN SPORT are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SCIENCE IN may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Check Point and SCIENCE IN

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

The idea behind Check Point Software and SCIENCE IN SPORT 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.