Correlation Between PPHE Hotel and Check Point
Can any of the company-specific risk be diversified away by investing in both PPHE Hotel 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 PPHE Hotel and Check Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPHE Hotel Group and Check Point Software, you can compare the effects of market volatilities on PPHE Hotel 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 PPHE Hotel with a short position of Check Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPHE Hotel and Check Point.
Diversification Opportunities for PPHE Hotel and Check Point
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between PPHE and Check is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding PPHE Hotel 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 PPHE Hotel 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 PPHE Hotel 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 PPHE Hotel i.e., PPHE Hotel and Check Point go up and down completely randomly.
Pair Corralation between PPHE Hotel and Check Point
Assuming the 90 days trading horizon PPHE Hotel Group is expected to generate 1.32 times more return on investment than Check Point. However, PPHE Hotel is 1.32 times more volatile than Check Point Software. It trades about -0.05 of its potential returns per unit of risk. Check Point Software is currently generating about -0.15 per unit of risk. If you would invest 131,500 in PPHE Hotel Group on October 12, 2024 and sell it today you would lose (2,500) from holding PPHE Hotel Group or give up 1.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
PPHE Hotel Group vs. Check Point Software
Performance |
| Timeline |
| PPHE Hotel Group |
| Check Point Software |
PPHE Hotel and Check Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPHE Hotel and Check Point
The main advantage of trading using opposite PPHE Hotel and Check Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPHE Hotel 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.| PPHE Hotel vs. Beazer Homes USA | PPHE Hotel vs. Herald Investment Trust | PPHE Hotel vs. Zurich Insurance Group | PPHE Hotel vs. Travel Leisure Co |
| Check Point vs. Solstad Offshore ASA | Check Point vs. Morgan Advanced Materials | Check Point vs. First Class Metals | Check Point vs. PPHE Hotel Group |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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