Correlation Between Check Point and CHINA EDUCATION
Can any of the company-specific risk be diversified away by investing in both Check Point and CHINA EDUCATION 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 CHINA EDUCATION 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 CHINA EDUCATION GROUP, you can compare the effects of market volatilities on Check Point and CHINA EDUCATION 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 CHINA EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and CHINA EDUCATION.
Diversification Opportunities for Check Point and CHINA EDUCATION
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Check and CHINA is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and CHINA EDUCATION GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA EDUCATION GROUP 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 CHINA EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA EDUCATION GROUP has no effect on the direction of Check Point i.e., Check Point and CHINA EDUCATION go up and down completely randomly.
Pair Corralation between Check Point and CHINA EDUCATION
Assuming the 90 days trading horizon Check Point Software is expected to generate 0.29 times more return on investment than CHINA EDUCATION. However, Check Point Software is 3.46 times less risky than CHINA EDUCATION. It trades about 0.24 of its potential returns per unit of risk. CHINA EDUCATION GROUP is currently generating about -0.26 per unit of risk. If you would invest 16,525 in Check Point Software on September 12, 2024 and sell it today you would earn a total of 1,190 from holding Check Point Software or generate 7.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Check Point Software vs. CHINA EDUCATION GROUP
Performance |
| Timeline |
| Check Point Software |
| CHINA EDUCATION GROUP |
Check Point and CHINA EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and CHINA EDUCATION
The main advantage of trading using opposite Check Point and CHINA EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, CHINA EDUCATION 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 CHINA EDUCATION will offset losses from the drop in CHINA EDUCATION's long position.| Check Point vs. Apple Inc | Check Point vs. Apple Inc | Check Point vs. Apple Inc | Check Point vs. Apple Inc |
| CHINA EDUCATION vs. Apple Inc | CHINA EDUCATION vs. Apple Inc | CHINA EDUCATION vs. Apple Inc | CHINA EDUCATION vs. Apple Inc |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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