Correlation Between Made Tech and Check Point
Can any of the company-specific risk be diversified away by investing in both Made Tech 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 Made Tech and Check Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Made Tech Group and Check Point Software, you can compare the effects of market volatilities on Made Tech 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 Made Tech with a short position of Check Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Made Tech and Check Point.
Diversification Opportunities for Made Tech and Check Point
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Made and Check is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Made Tech Group 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 Made Tech 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 Made Tech Group 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 Made Tech i.e., Made Tech and Check Point go up and down completely randomly.
Pair Corralation between Made Tech and Check Point
Assuming the 90 days trading horizon Made Tech Group is expected to generate 1.85 times more return on investment than Check Point. However, Made Tech is 1.85 times more volatile than Check Point Software. It trades about 0.21 of its potential returns per unit of risk. Check Point Software is currently generating about -0.04 per unit of risk. If you would invest 1,625 in Made Tech Group on October 26, 2024 and sell it today you would earn a total of 1,045 from holding Made Tech Group or generate 64.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.72% |
| Values | Daily Returns |
Made Tech Group vs. Check Point Software
Performance |
| Timeline |
| Made Tech Group |
| Check Point Software |
Made Tech and Check Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Made Tech and Check Point
The main advantage of trading using opposite Made Tech and Check Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Made Tech 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.| Made Tech vs. Check Point Software | Made Tech vs. JD Sports Fashion | Made Tech vs. Axway Software SA | Made Tech vs. Austevoll Seafood ASA |
| Check Point vs. Toyota Motor Corp | Check Point vs. SoftBank Group Corp | Check Point vs. OTP Bank Nyrt | Check Point vs. Agilent Technologies |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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