Correlation Between Check Point and HITACHI CONSTRMACHADR/2

Can any of the company-specific risk be diversified away by investing in both Check Point and HITACHI CONSTRMACHADR/2 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 HITACHI CONSTRMACHADR/2 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 HITACHI STRMACHADR2, you can compare the effects of market volatilities on Check Point and HITACHI CONSTRMACHADR/2 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 HITACHI CONSTRMACHADR/2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and HITACHI CONSTRMACHADR/2.

Diversification Opportunities for Check Point and HITACHI CONSTRMACHADR/2

0.91

Correlation Coefficient

Check Point  HITACHI CONSTRMACHADR/2

Almost no diversification

The 3 months correlation between Check and HITACHI is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and HITACHI STRMACHADR2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HITACHI CONSTRMACHADR/2 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 HITACHI CONSTRMACHADR/2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HITACHI CONSTRMACHADR/2 has no effect on the direction of Check Point i.e., Check Point and HITACHI CONSTRMACHADR/2 go up and down completely randomly.

Pair Corralation between Check Point and HITACHI CONSTRMACHADR/2

Assuming the 90 days trading horizon Check Point Software is expected to generate 0.91 times more return on investment than HITACHI CONSTRMACHADR/2. However, Check Point Software is 1.1 times less risky than HITACHI CONSTRMACHADR/2. It trades about 0.17 of its potential returns per unit of risk. HITACHI STRMACHADR2 is currently generating about 0.15 per unit of risk. If you would invest  17,890  in Check Point Software on December 5, 2024 and sell it today you would earn a total of  2,920  from holding Check Point Software or generate 16.32% return on investment over 90 days.

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

Check Point Software  vs.  HITACHI STRMACHADR2

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.

HITACHI CONSTRMACHADR/2

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HITACHI STRMACHADR2 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, HITACHI CONSTRMACHADR/2 reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Check Point and HITACHI CONSTRMACHADR/2

The main advantage of trading using opposite Check Point and HITACHI CONSTRMACHADR/2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, HITACHI CONSTRMACHADR/2 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 HITACHI CONSTRMACHADR/2 will offset losses from the drop in HITACHI CONSTRMACHADR/2's long position.

The idea behind Check Point Software and HITACHI STRMACHADR2 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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..