Correlation Between Check Point and Light Science
Can any of the company-specific risk be diversified away by investing in both Check Point and Light Science 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 Light Science 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 Light Science Technologies, you can compare the effects of market volatilities on Check Point and Light Science 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 Light Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Light Science.
Diversification Opportunities for Check Point and Light Science
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Check and Light is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Light Science Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Light Science Techno 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 Light Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Light Science Techno has no effect on the direction of Check Point i.e., Check Point and Light Science go up and down completely randomly.
Pair Corralation between Check Point and Light Science
Assuming the 90 days trading horizon Check Point Software is expected to generate 0.38 times more return on investment than Light Science. However, Check Point Software is 2.65 times less risky than Light Science. It trades about -0.16 of its potential returns per unit of risk. Light Science Technologies is currently generating about -0.09 per unit of risk. If you would invest 18,857 in Check Point Software on October 9, 2024 and sell it today you would lose (637.00) from holding Check Point Software or give up 3.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Check Point Software vs. Light Science Technologies
Performance |
| Timeline |
| Check Point Software |
| Light Science Techno |
Check Point and Light Science Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and Light Science
The main advantage of trading using opposite Check Point and Light Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, Light Science 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 Light Science will offset losses from the drop in Light Science'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 |
| Light Science vs. SupplyMe Capital PLC | Light Science vs. SM Energy Co | Light Science vs. FuelCell Energy | Light Science vs. Grand Vision Media |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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