Correlation Between Appian Corp and Check Point

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

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

Diversification Opportunities for Appian Corp and Check Point

0.44

Correlation Coefficient

Appian Corp  Check Point

Very weak diversification

The 3 months correlation between Appian and Check is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Appian Corp 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 Appian Corp 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 Appian Corp 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 Appian Corp i.e., Appian Corp and Check Point go up and down completely randomly.

Pair Corralation between Appian Corp and Check Point

Given the investment horizon of 90 days Appian Corp is expected to under-perform the Check Point. In addition to that, Appian Corp is 3.55 times more volatile than Check Point Software. It trades about -0.04 of its total potential returns per unit of risk. Check Point Software is currently generating about -0.11 per unit of volatility. If you would invest  16,414  in Check Point Software on January 26, 2024 and sell it today you would lose (314.00) from holding Check Point Software or give up 1.91% of portfolio value over 90 days.

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

Appian Corp  vs.  Check Point Software

Appian Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Appian Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Appian Corp may actually be approaching a critical reversion point that can send shares even higher in May 2024.

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. Even with relatively invariable forward-looking signals, Check Point is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Appian Corp and Check Point

The main advantage of trading using opposite Appian Corp and Check Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Appian Corp 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 Appian Corp 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.