Correlation Between Check Point and CHINA SHENHUA
Can any of the company-specific risk be diversified away by investing in both Check Point and CHINA SHENHUA 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 SHENHUA 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 SHENHUA ENA, you can compare the effects of market volatilities on Check Point and CHINA SHENHUA 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 SHENHUA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and CHINA SHENHUA.
Diversification Opportunities for Check Point and CHINA SHENHUA
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Check and CHINA is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and CHINA SHENHUA ENA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA SHENHUA ENA 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 SHENHUA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA SHENHUA ENA has no effect on the direction of Check Point i.e., Check Point and CHINA SHENHUA go up and down completely randomly.
Pair Corralation between Check Point and CHINA SHENHUA
Assuming the 90 days trading horizon Check Point Software is expected to generate 0.78 times more return on investment than CHINA SHENHUA. However, Check Point Software is 1.28 times less risky than CHINA SHENHUA. It trades about 0.09 of its potential returns per unit of risk. CHINA SHENHUA ENA is currently generating about 0.0 per unit of risk. If you would invest 14,625 in Check Point Software on September 12, 2024 and sell it today you would earn a total of 3,090 from holding Check Point Software or generate 21.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
Check Point Software vs. CHINA SHENHUA ENA
Performance |
| Timeline |
| Check Point Software |
| CHINA SHENHUA ENA |
Check Point and CHINA SHENHUA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and CHINA SHENHUA
The main advantage of trading using opposite Check Point and CHINA SHENHUA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, CHINA SHENHUA 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 SHENHUA will offset losses from the drop in CHINA SHENHUA's long position.| Check Point vs. Apple Inc | Check Point vs. Apple Inc | Check Point vs. Apple Inc | Check Point vs. Apple Inc |
| CHINA SHENHUA vs. China Coal Energy | CHINA SHENHUA vs. Yancoal Australia | CHINA SHENHUA vs. Banpu PCL | CHINA SHENHUA vs. CONSOL Energy |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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