Correlation Between Check Point and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both Check Point and LPKF Laser 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 LPKF Laser 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 LPKF Laser Electronics, you can compare the effects of market volatilities on Check Point and LPKF Laser 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 LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and LPKF Laser.
Diversification Opportunities for Check Point and LPKF Laser
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Check and LPKF is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and LPKF Laser Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPKF Laser Electronics 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 LPKF Laser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPKF Laser Electronics has no effect on the direction of Check Point i.e., Check Point and LPKF Laser go up and down completely randomly.
Pair Corralation between Check Point and LPKF Laser
Assuming the 90 days trading horizon Check Point Software is expected to generate 2.01 times more return on investment than LPKF Laser. However, Check Point is 2.01 times more volatile than LPKF Laser Electronics. It trades about 0.26 of its potential returns per unit of risk. LPKF Laser Electronics is currently generating about -0.06 per unit of risk. If you would invest 17,059 in Check Point Software on September 2, 2024 and sell it today you would earn a total of 1,157 from holding Check Point Software or generate 6.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Check Point Software vs. LPKF Laser Electronics
Performance |
| Timeline |
| Check Point Software |
| LPKF Laser Electronics |
Check Point and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and LPKF Laser
The main advantage of trading using opposite Check Point and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, LPKF Laser 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 LPKF Laser will offset losses from the drop in LPKF Laser's long position.| Check Point vs. Toyota Motor Corp | Check Point vs. OTP Bank Nyrt | Check Point vs. Las Vegas Sands | Check Point vs. Yum Brands |
| LPKF Laser vs. Uniper SE | LPKF Laser vs. Mulberry Group PLC | LPKF Laser vs. London Security Plc | LPKF Laser vs. Triad Group PLC |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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