Correlation Between Primary Health and Check Point

Can any of the company-specific risk be diversified away by investing in both Primary Health 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 Primary Health and Check Point into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Primary Health Properties and Check Point Software, you can compare the effects of market volatilities on Primary Health 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 Primary Health with a short position of Check Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Primary Health and Check Point.

Diversification Opportunities for Primary Health and Check Point

0.59

Correlation Coefficient

Primary Health  Check Point

Very weak diversification

The 3 months correlation between Primary and Check is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Primary Health Properties 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 Primary Health 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 Primary Health Properties 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 Primary Health i.e., Primary Health and Check Point go up and down completely randomly.

Pair Corralation between Primary Health and Check Point

Assuming the 90 days trading horizon Primary Health Properties is expected to under-perform the Check Point. But the stock apears to be less risky and, when comparing its historical volatility, Primary Health Properties is 2.27 times less risky than Check Point. The stock trades about -0.07 of its potential returns per unit of risk. The Check Point Software is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  18,798  in Check Point Software on September 5, 2024 and sell it today you would earn a total of  173.00  from holding Check Point Software or generate 0.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Primary Health Properties  vs.  Check Point Software

Primary Health Properties

Risk-Adjusted Performance

0 of 100

Very Weak

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

Check Point Software

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Check Point Software are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Primary Health and Check Point

The main advantage of trading using opposite Primary Health and Check Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Primary Health 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.

The idea behind Primary Health Properties and Check Point Software 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.