Correlation Between Check Point and Lery Seafood

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

Diversification Opportunities for Check Point and Lery Seafood

0.23

Correlation Coefficient

Check Point  Lery Seafood

Modest diversification

The 3 months correlation between Check and Lery is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Lery Seafood Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lery Seafood Group 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 Lery Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lery Seafood Group has no effect on the direction of Check Point i.e., Check Point and Lery Seafood go up and down completely randomly.

Pair Corralation between Check Point and Lery Seafood

Assuming the 90 days trading horizon Check Point Software is expected to generate 0.82 times more return on investment than Lery Seafood. However, Check Point Software is 1.21 times less risky than Lery Seafood. It trades about -0.06 of its potential returns per unit of risk. Lery Seafood Group is currently generating about -0.17 per unit of risk. If you would invest  17,805  in Check Point Software on October 10, 2024 and sell it today you would lose (270.00) from holding Check Point Software or give up 1.52% of portfolio value over 90 days.

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

Check Point Software  vs.  Lery Seafood Group

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.

Lery Seafood Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lery Seafood Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Lery Seafood is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Check Point and Lery Seafood

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

The idea behind Check Point Software and Lery Seafood Group 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.