Correlation Between Check Point and Technicolor
Can any of the company-specific risk be diversified away by investing in both Check Point and Technicolor 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 Technicolor 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 Technicolor, you can compare the effects of market volatilities on Check Point and Technicolor 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 Technicolor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Technicolor.
Diversification Opportunities for Check Point and Technicolor
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Check and Technicolor is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Technicolor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technicolor 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 Technicolor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technicolor has no effect on the direction of Check Point i.e., Check Point and Technicolor go up and down completely randomly.
Pair Corralation between Check Point and Technicolor
Assuming the 90 days trading horizon Check Point Software is expected to under-perform the Technicolor. But the stock apears to be less risky and, when comparing its historical volatility, Check Point Software is 2.45 times less risky than Technicolor. The stock trades about -0.16 of its potential returns per unit of risk. The Technicolor is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Technicolor on October 9, 2024 and sell it today you would earn a total of 0.00 from holding Technicolor or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Check Point Software vs. Technicolor
Performance |
| Timeline |
| Check Point Software |
| Technicolor |
Check Point and Technicolor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and Technicolor
The main advantage of trading using opposite Check Point and Technicolor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, Technicolor 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 Technicolor will offset losses from the drop in Technicolor's long position.| Check Point vs. HCA Healthcare | Check Point vs. Trellus Health plc | Check Point vs. AcadeMedia AB | Check Point vs. Worldwide Healthcare Trust |
| Technicolor vs. Walmart | Technicolor vs. BYD Co | Technicolor vs. Volkswagen AG | Technicolor vs. Volkswagen AG Non Vtg |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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