Correlation Between Check Point and IND+COMMBK CHINA
Can any of the company-specific risk be diversified away by investing in both Check Point and IND+COMMBK CHINA 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 IND+COMMBK CHINA 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 INDCOMMBK CHINA ADR20, you can compare the effects of market volatilities on Check Point and IND+COMMBK CHINA 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 IND+COMMBK CHINA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and IND+COMMBK CHINA.
Diversification Opportunities for Check Point and IND+COMMBK CHINA
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Check and IND+COMMBK is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and INDCOMMBK CHINA ADR20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDCOMMBK CHINA ADR20 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 IND+COMMBK CHINA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDCOMMBK CHINA ADR20 has no effect on the direction of Check Point i.e., Check Point and IND+COMMBK CHINA go up and down completely randomly.
Pair Corralation between Check Point and IND+COMMBK CHINA
Assuming the 90 days trading horizon Check Point is expected to generate 1.39 times less return on investment than IND+COMMBK CHINA. But when comparing it to its historical volatility, Check Point Software is 1.73 times less risky than IND+COMMBK CHINA. It trades about 0.05 of its potential returns per unit of risk. INDCOMMBK CHINA ADR20 is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 744.00 in INDCOMMBK CHINA ADR20 on September 2, 2024 and sell it today you would earn a total of 326.00 from holding INDCOMMBK CHINA ADR20 or generate 43.82% 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. INDCOMMBK CHINA ADR20
Performance |
| Timeline |
| Check Point Software |
| INDCOMMBK CHINA ADR20 |
Check Point and IND+COMMBK CHINA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and IND+COMMBK CHINA
The main advantage of trading using opposite Check Point and IND+COMMBK CHINA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, IND+COMMBK CHINA 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 IND+COMMBK CHINA will offset losses from the drop in IND+COMMBK CHINA'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 |
| IND+COMMBK CHINA vs. CHINA BANK ADR20 | IND+COMMBK CHINA vs. AGRICULTBK HADR25 YC | IND+COMMBK CHINA vs. COMMONWBK AUSTRSPADRS | IND+COMMBK CHINA vs. The Toronto Dominion Bank |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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