Correlation Between Check Point and Neometals

Can any of the company-specific risk be diversified away by investing in both Check Point and Neometals 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 Neometals 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 Neometals, you can compare the effects of market volatilities on Check Point and Neometals 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 Neometals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Neometals.

Diversification Opportunities for Check Point and Neometals

0.11

Correlation Coefficient

Check Point  Neometals

Average diversification

The 3 months correlation between Check and Neometals is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Neometals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neometals 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 Neometals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neometals has no effect on the direction of Check Point i.e., Check Point and Neometals go up and down completely randomly.

Pair Corralation between Check Point and Neometals

Assuming the 90 days trading horizon Check Point Software is expected to under-perform the Neometals. But the stock apears to be less risky and, when comparing its historical volatility, Check Point Software is 1.89 times less risky than Neometals. The stock trades about 0.0 of its potential returns per unit of risk. The Neometals is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  450.00  in Neometals on September 19, 2024 and sell it today you would lose (25.00) from holding Neometals or give up 5.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Check Point Software  vs.  Neometals

Check Point Software

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Check Point Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Check Point is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Neometals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neometals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Neometals is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Check Point and Neometals

The main advantage of trading using opposite Check Point and Neometals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, Neometals 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 Neometals will offset losses from the drop in Neometals' long position.

The idea behind Check Point Software and Neometals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.