Correlation Between Altair Engineering and Steadfast Group

Can any of the company-specific risk be diversified away by investing in both Altair Engineering and Steadfast Group 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 Altair Engineering and Steadfast Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Altair Engineering and Steadfast Group Limited, you can compare the effects of market volatilities on Altair Engineering and Steadfast Group 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 Altair Engineering with a short position of Steadfast Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altair Engineering and Steadfast Group.

Diversification Opportunities for Altair Engineering and Steadfast Group

0.44

Correlation Coefficient

Altair Engineering  Steadfast Group

Very weak diversification

The 3 months correlation between Altair and Steadfast is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering and Steadfast Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steadfast Group and Altair Engineering 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 Altair Engineering are associated (or correlated) with Steadfast Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steadfast Group has no effect on the direction of Altair Engineering i.e., Altair Engineering and Steadfast Group go up and down completely randomly.

Pair Corralation between Altair Engineering and Steadfast Group

Assuming the 90 days horizon Altair Engineering is expected to generate 0.61 times more return on investment than Steadfast Group. However, Altair Engineering is 1.64 times less risky than Steadfast Group. It trades about 0.5 of its potential returns per unit of risk. Steadfast Group Limited is currently generating about -0.08 per unit of risk. If you would invest  10,000  in Altair Engineering on October 6, 2024 and sell it today you would earn a total of  600.00  from holding Altair Engineering or generate 6.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

Altair Engineering  vs.  Steadfast Group Limited

Altair Engineering

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Altair Engineering are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Altair Engineering reported solid returns over the last few months and may actually be approaching a breakup point.

Steadfast Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Steadfast Group Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Steadfast Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Altair Engineering and Steadfast Group

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

The idea behind Altair Engineering and Steadfast Group Limited 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.