Correlation Between Check Point and MAHLE Metal

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

Diversification Opportunities for Check Point and MAHLE Metal

0.03

Correlation Coefficient

Check Point  MAHLE Metal

Significant diversification

The 3 months correlation between Check and MAHLE is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and MAHLE Metal Leve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAHLE Metal Leve 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 MAHLE Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAHLE Metal Leve has no effect on the direction of Check Point i.e., Check Point and MAHLE Metal go up and down completely randomly.

Pair Corralation between Check Point and MAHLE Metal

Assuming the 90 days trading horizon Check Point Software is expected to under-perform the MAHLE Metal. But the stock apears to be less risky and, when comparing its historical volatility, Check Point Software is 5.02 times less risky than MAHLE Metal. The stock trades about -0.14 of its potential returns per unit of risk. The MAHLE Metal Leve is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,850  in MAHLE Metal Leve on April 20, 2025 and sell it today you would earn a total of  20.00  from holding MAHLE Metal Leve or generate 0.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Check Point Software  vs.  MAHLE Metal Leve

Check Point Software

Risk-Adjusted Performance

Very Weak

Over the last 90 days Check Point Software has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical indicators, Check Point is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

MAHLE Metal Leve

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MAHLE Metal Leve are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, MAHLE Metal is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Check Point and MAHLE Metal

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

The idea behind Check Point Software and MAHLE Metal Leve 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.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.