Correlation Between Nordon Indstrias and Check Point

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

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

Diversification Opportunities for Nordon Indstrias and Check Point

-0.76

Correlation Coefficient

Nordon Indstrias  Check Point

Pay attention - limited upside

The 3 months correlation between Nordon and Check is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Nordon Indstrias Metalrgicas 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 Nordon Indstrias 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 Nordon Indstrias Metalrgicas 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 Nordon Indstrias i.e., Nordon Indstrias and Check Point go up and down completely randomly.

Pair Corralation between Nordon Indstrias and Check Point

Assuming the 90 days trading horizon Nordon Indstrias Metalrgicas is expected to under-perform the Check Point. In addition to that, Nordon Indstrias is 1.66 times more volatile than Check Point Software. It trades about -0.11 of its total potential returns per unit of risk. Check Point Software is currently generating about 0.21 per unit of volatility. If you would invest  45,135  in Check Point Software on October 6, 2024 and sell it today you would earn a total of  13,619  from holding Check Point Software or generate 30.17% return on investment over 90 days.

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

Nordon Indstrias Metalrgicas  vs.  Check Point Software

Nordon Indstrias Met

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordon Indstrias Metalrgicas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Check Point Software

Risk-Adjusted Performance

16 of 100

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. Despite somewhat weak technical indicators, Check Point sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nordon Indstrias and Check Point

The main advantage of trading using opposite Nordon Indstrias and Check Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordon Indstrias 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 Nordon Indstrias Metalrgicas 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.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..