Correlation Between Trellus Health and Check Point

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

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

Diversification Opportunities for Trellus Health and Check Point

0.33

Correlation Coefficient

Trellus Health  Check Point

Weak diversification

The 3 months correlation between Trellus and Check is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Trellus Health plc 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 Trellus Health 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 Trellus Health plc 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 Trellus Health i.e., Trellus Health and Check Point go up and down completely randomly.

Pair Corralation between Trellus Health and Check Point

Assuming the 90 days trading horizon Trellus Health plc is expected to generate 55.56 times more return on investment than Check Point. However, Trellus Health is 55.56 times more volatile than Check Point Software. It trades about 0.11 of its potential returns per unit of risk. Check Point Software is currently generating about 0.19 per unit of risk. If you would invest  57.00  in Trellus Health plc on December 23, 2024 and sell it today you would earn a total of  113.00  from holding Trellus Health plc or generate 198.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Trellus Health plc  vs.  Check Point Software

Trellus Health plc

Risk-Adjusted Performance

OK

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

Check Point Software

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Check Point Software are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Check Point unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Trellus Health and Check Point

The main advantage of trading using opposite Trellus Health and Check Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trellus Health 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 Trellus Health plc 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.