Correlation Between Check Point and Hawesko Holding

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

Diversification Opportunities for Check Point and Hawesko Holding

-0.59

Correlation Coefficient

Check Point  Hawesko Holding

Excellent diversification

The 3 months correlation between Check and Hawesko is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Hawesko Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawesko Holding AG 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 Hawesko Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawesko Holding AG has no effect on the direction of Check Point i.e., Check Point and Hawesko Holding go up and down completely randomly.

Pair Corralation between Check Point and Hawesko Holding

Assuming the 90 days trading horizon Check Point Software is expected to generate 0.95 times more return on investment than Hawesko Holding. However, Check Point Software is 1.06 times less risky than Hawesko Holding. It trades about 0.17 of its potential returns per unit of risk. Hawesko Holding AG is currently generating about -0.08 per unit of risk. If you would invest  18,030  in Check Point Software on December 23, 2024 and sell it today you would earn a total of  3,160  from holding Check Point Software or generate 17.53% return on investment over 90 days.

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

Check Point Software  vs.  Hawesko Holding AG

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 fragile basic indicators, Check Point displayed solid returns over the last few months and may actually be approaching a breakup point.

Hawesko Holding AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hawesko Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Check Point and Hawesko Holding

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

The idea behind Check Point Software and Hawesko Holding AG 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.