Correlation Between Check Point and DOCDATA

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

Diversification Opportunities for Check Point and DOCDATA

0.6

Correlation Coefficient

Check Point  DOCDATA

Poor diversification

The 3 months correlation between Check and DOCDATA is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and DOCDATA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOCDATA 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 DOCDATA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOCDATA has no effect on the direction of Check Point i.e., Check Point and DOCDATA go up and down completely randomly.

Pair Corralation between Check Point and DOCDATA

Assuming the 90 days trading horizon Check Point Software is expected to generate 0.43 times more return on investment than DOCDATA. However, Check Point Software is 2.34 times less risky than DOCDATA. It trades about 0.02 of its potential returns per unit of risk. DOCDATA is currently generating about -0.01 per unit of risk. If you would invest  18,690  in Check Point Software on April 29, 2025 and sell it today you would earn a total of  220.00  from holding Check Point Software or generate 1.18% return on investment over 90 days.

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

Check Point Software  vs.  DOCDATA

Check Point Software

Risk-Adjusted Performance

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 very healthy basic indicators, Check Point is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

DOCDATA

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Check Point and DOCDATA

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

The idea behind Check Point Software and DOCDATA 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.