Correlation Between Light Science and Check Point
Can any of the company-specific risk be diversified away by investing in both Light Science 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 Light Science and Check Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Light Science Technologies and Check Point Software, you can compare the effects of market volatilities on Light Science 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 Light Science with a short position of Check Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Light Science and Check Point.
Diversification Opportunities for Light Science and Check Point
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Light and Check is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Light Science Technologies 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 Light Science 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 Light Science Technologies 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 Light Science i.e., Light Science and Check Point go up and down completely randomly.
Pair Corralation between Light Science and Check Point
Assuming the 90 days trading horizon Light Science Technologies is expected to under-perform the Check Point. In addition to that, Light Science is 2.65 times more volatile than Check Point Software. It trades about -0.09 of its total potential returns per unit of risk. Check Point Software is currently generating about -0.16 per unit of volatility. If you would invest 18,857 in Check Point Software on October 9, 2024 and sell it today you would lose (637.00) from holding Check Point Software or give up 3.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Light Science Technologies vs. Check Point Software
Performance |
| Timeline |
| Light Science Techno |
| Check Point Software |
Light Science and Check Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Light Science and Check Point
The main advantage of trading using opposite Light Science and Check Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Light Science 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.| Light Science vs. SupplyMe Capital PLC | Light Science vs. SM Energy Co | Light Science vs. FuelCell Energy | Light Science vs. Grand Vision Media |
| Check Point vs. HCA Healthcare | Check Point vs. Trellus Health plc | Check Point vs. AcadeMedia AB | Check Point vs. Worldwide Healthcare Trust |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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