Correlation Between Check Point and PT Indofood

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

Diversification Opportunities for Check Point and PT Indofood

-0.28

Correlation Coefficient

Check Point  PT Indofood

Very good diversification

The 3 months correlation between Check and ISM is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and PT Indofood Sukses in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Indofood Sukses 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 PT Indofood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Indofood Sukses has no effect on the direction of Check Point i.e., Check Point and PT Indofood go up and down completely randomly.

Pair Corralation between Check Point and PT Indofood

Assuming the 90 days trading horizon Check Point Software is expected to generate 0.65 times more return on investment than PT Indofood. However, Check Point Software is 1.53 times less risky than PT Indofood. It trades about 0.0 of its potential returns per unit of risk. PT Indofood Sukses is currently generating about -0.19 per unit of risk. If you would invest  17,805  in Check Point Software on October 8, 2024 and sell it today you would lose (15.00) from holding Check Point Software or give up 0.08% of portfolio value over 90 days.

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

Check Point Software  vs.  PT Indofood Sukses

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

PT Indofood Sukses

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PT Indofood Sukses are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PT Indofood reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Check Point and PT Indofood

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

The idea behind Check Point Software and PT Indofood Sukses 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.