Correlation Between Nok Airlines and Check Point

Can any of the company-specific risk be diversified away by investing in both Nok Airlines and Check Point 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 Nok Airlines and Check Point into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nok Airlines PCL and Check Point Software, you can compare the effects of market volatilities on Nok Airlines and Check Point 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 Nok Airlines with a short position of Check Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nok Airlines and Check Point.

Diversification Opportunities for Nok Airlines and Check Point

0.0

Correlation Coefficient

Nok Airlines  Check Point

Pay attention - limited upside

The 3 months correlation between Nok and Check is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nok Airlines PCL and Check Point Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Check Point Software and Nok Airlines 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 Nok Airlines PCL are associated (or correlated) with Check Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Check Point Software has no effect on the direction of Nok Airlines i.e., Nok Airlines and Check Point go up and down completely randomly.

Pair Corralation between Nok Airlines and Check Point

If you would invest  17,430  in Check Point Software on December 2, 2024 and sell it today you would earn a total of  3,600  from holding Check Point Software or generate 20.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Nok Airlines PCL  vs.  Check Point Software

Nok Airlines PCL

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nok Airlines PCL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Nok Airlines is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Check Point Software

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Check Point Software are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Check Point displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nok Airlines and Check Point

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

The idea behind Nok Airlines PCL and Check Point 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.