Correlation Between Check Point and ENN Energy

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

Diversification Opportunities for Check Point and ENN Energy

-0.24

Correlation Coefficient

Check Point  ENN Energy

Very good diversification

The 3 months correlation between Check and ENN is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and ENN Energy Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENN Energy Holdings 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 ENN Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENN Energy Holdings has no effect on the direction of Check Point i.e., Check Point and ENN Energy go up and down completely randomly.

Pair Corralation between Check Point and ENN Energy

Assuming the 90 days trading horizon Check Point Software is expected to generate 0.64 times more return on investment than ENN Energy. However, Check Point Software is 1.56 times less risky than ENN Energy. It trades about 0.08 of its potential returns per unit of risk. ENN Energy Holdings is currently generating about 0.02 per unit of risk. If you would invest  15,160  in Check Point Software on September 26, 2024 and sell it today you would earn a total of  2,870  from holding Check Point Software or generate 18.93% return on investment over 90 days.

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

Check Point Software  vs.  ENN Energy Holdings

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

ENN Energy Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ENN Energy Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical indicators, ENN Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Check Point and ENN Energy

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

The idea behind Check Point Software and ENN Energy Holdings 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.