Correlation Between Plastic Omnium and Check Point
Can any of the company-specific risk be diversified away by investing in both Plastic Omnium and Check Point 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 Plastic Omnium and Check Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plastic Omnium and Check Point Software, you can compare the effects of market volatilities on Plastic Omnium and Check Point 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 Plastic Omnium with a short position of Check Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plastic Omnium and Check Point.
Diversification Opportunities for Plastic Omnium and Check Point
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Plastic and Check is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Plastic Omnium and Check Point Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Check Point Software and Plastic Omnium 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 Plastic Omnium are associated (or correlated) with Check Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Check Point Software has no effect on the direction of Plastic Omnium i.e., Plastic Omnium and Check Point go up and down completely randomly.
Pair Corralation between Plastic Omnium and Check Point
Assuming the 90 days trading horizon Plastic Omnium is expected to generate 1.23 times less return on investment than Check Point. In addition to that, Plastic Omnium is 1.37 times more volatile than Check Point Software. It trades about 0.08 of its total potential returns per unit of risk. Check Point Software is currently generating about 0.13 per unit of volatility. If you would invest 15,540 in Check Point Software on November 3, 2024 and sell it today you would earn a total of 5,320 from holding Check Point Software or generate 34.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plastic Omnium vs. Check Point Software
Performance |
| Timeline |
| Plastic Omnium |
| Check Point Software |
Plastic Omnium and Check Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plastic Omnium and Check Point
The main advantage of trading using opposite Plastic Omnium and Check Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plastic Omnium position performs unexpectedly, Check Point 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 Check Point will offset losses from the drop in Check Point's long position.| Plastic Omnium vs. Air Lease | Plastic Omnium vs. CHEMICAL INDUSTRIES | Plastic Omnium vs. INDO RAMA SYNTHETIC | Plastic Omnium vs. UNITED RENTALS |
| Check Point vs. SWISS WATER DECAFFCOFFEE | Check Point vs. NXP Semiconductors NV | Check Point vs. ETFS Coffee ETC | Check Point vs. Aedas Homes SA |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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