Correlation Between Check Point and ASURE SOFTWARE

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

Diversification Opportunities for Check Point and ASURE SOFTWARE

0.05

Correlation Coefficient

Check Point  ASURE SOFTWARE

Significant diversification

The 3 months correlation between Check and ASURE is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and ASURE SOFTWARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASURE SOFTWARE 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 ASURE SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASURE SOFTWARE has no effect on the direction of Check Point i.e., Check Point and ASURE SOFTWARE go up and down completely randomly.

Pair Corralation between Check Point and ASURE SOFTWARE

Assuming the 90 days trading horizon Check Point is expected to generate 1.85 times less return on investment than ASURE SOFTWARE. But when comparing it to its historical volatility, Check Point Software is 1.38 times less risky than ASURE SOFTWARE. It trades about 0.05 of its potential returns per unit of risk. ASURE SOFTWARE is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  810.00  in ASURE SOFTWARE on September 19, 2024 and sell it today you would earn a total of  80.00  from holding ASURE SOFTWARE or generate 9.88% return on investment over 90 days.

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

Check Point Software  vs.  ASURE SOFTWARE

Check Point Software

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Check Point Software are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Check Point may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ASURE SOFTWARE

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ASURE SOFTWARE are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, ASURE SOFTWARE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Check Point and ASURE SOFTWARE

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

The idea behind Check Point Software and ASURE SOFTWARE 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.