Correlation Between Polski Koncern and Check Point

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

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

Diversification Opportunities for Polski Koncern and Check Point

0.13

Correlation Coefficient

Polski Koncern  Check Point

Average diversification

The 3 months correlation between Polski and Check is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Polski Koncern Naftowy 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 Polski Koncern 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 Polski Koncern Naftowy 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 Polski Koncern i.e., Polski Koncern and Check Point go up and down completely randomly.

Pair Corralation between Polski Koncern and Check Point

Assuming the 90 days trading horizon Polski Koncern Naftowy is expected to under-perform the Check Point. But the stock apears to be less risky and, when comparing its historical volatility, Polski Koncern Naftowy is 1.08 times less risky than Check Point. The stock trades about -0.06 of its potential returns per unit of risk. The Check Point Software is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  18,420  in Check Point Software on October 9, 2024 and sell it today you would lose (1,060) from holding Check Point Software or give up 5.75% of portfolio value over 90 days.

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

Polski Koncern Naftowy  vs.  Check Point Software

Polski Koncern Naftowy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Polski Koncern Naftowy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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.

Pair Trading with Polski Koncern and Check Point

The main advantage of trading using opposite Polski Koncern and Check Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polski Koncern 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 Polski Koncern Naftowy 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.