Correlation Between Check Point and Casio Computer

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

Diversification Opportunities for Check Point and Casio Computer

0.42

Correlation Coefficient

Check Point  Casio Computer

Very weak diversification

The 3 months correlation between Check and Casio is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Casio Computer CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Casio Computer CoLtd 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 Casio Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Casio Computer CoLtd has no effect on the direction of Check Point i.e., Check Point and Casio Computer go up and down completely randomly.

Pair Corralation between Check Point and Casio Computer

Assuming the 90 days trading horizon Check Point Software is expected to under-perform the Casio Computer. In addition to that, Check Point is 1.49 times more volatile than Casio Computer CoLtd. It trades about -0.04 of its total potential returns per unit of risk. Casio Computer CoLtd is currently generating about 0.2 per unit of volatility. If you would invest  681.00  in Casio Computer CoLtd on September 23, 2024 and sell it today you would earn a total of  104.00  from holding Casio Computer CoLtd or generate 15.27% 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.  Casio Computer CoLtd

Check Point Software

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Check Point Software are ranked lower than 2 (%) 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.

Casio Computer CoLtd

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Casio Computer CoLtd are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental indicators, Casio Computer may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Check Point and Casio Computer

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

The idea behind Check Point Software and Casio Computer CoLtd 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.