Correlation Between Check Point and Hyundai
Can any of the company-specific risk be diversified away by investing in both Check Point and Hyundai 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 Hyundai 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 Hyundai Motor, you can compare the effects of market volatilities on Check Point and Hyundai 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 Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Hyundai.
Diversification Opportunities for Check Point and Hyundai
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Check and Hyundai is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor 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 Hyundai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Motor has no effect on the direction of Check Point i.e., Check Point and Hyundai go up and down completely randomly.
Pair Corralation between Check Point and Hyundai
Assuming the 90 days trading horizon Check Point Software is expected to generate 0.59 times more return on investment than Hyundai. However, Check Point Software is 1.7 times less risky than Hyundai. It trades about 0.27 of its potential returns per unit of risk. Hyundai Motor is currently generating about -0.02 per unit of risk. If you would invest 15,825 in Check Point Software on September 2, 2024 and sell it today you would earn a total of 1,400 from holding Check Point Software or generate 8.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Check Point Software vs. Hyundai Motor
Performance |
| Timeline |
| Check Point Software |
| Hyundai Motor |
Check Point and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and Hyundai
The main advantage of trading using opposite Check Point and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, Hyundai 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 Hyundai will offset losses from the drop in Hyundai's long position.| Check Point vs. URBAN OUTFITTERS | Check Point vs. SLR Investment Corp | Check Point vs. ECHO INVESTMENT ZY | Check Point vs. PennyMac Mortgage Investment |
| Hyundai vs. NEWELL RUBBERMAID | Hyundai vs. Materialise NV | Hyundai vs. Martin Marietta Materials | Hyundai vs. APPLIED MATERIALS |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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