Correlation Between Check Point and Alfa Financial

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

Diversification Opportunities for Check Point and Alfa Financial

0.53

Correlation Coefficient

Check Point  Alfa Financial

Very weak diversification

The 3 months correlation between Check and Alfa is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Alfa Financial Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Financial Software 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 Alfa Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Financial Software has no effect on the direction of Check Point i.e., Check Point and Alfa Financial go up and down completely randomly.

Pair Corralation between Check Point and Alfa Financial

Assuming the 90 days trading horizon Check Point is expected to generate 1.21 times less return on investment than Alfa Financial. But when comparing it to its historical volatility, Check Point Software is 1.09 times less risky than Alfa Financial. It trades about 0.07 of its potential returns per unit of risk. Alfa Financial Software is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  20,652  in Alfa Financial Software on April 24, 2025 and sell it today you would earn a total of  1,448  from holding Alfa Financial Software or generate 7.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Check Point Software  vs.  Alfa Financial Software

Check Point Software

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Check Point Software are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Check Point may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Alfa Financial Software

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alfa Financial Software are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alfa Financial may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Check Point and Alfa Financial

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

The idea behind Check Point Software and Alfa Financial 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.