Correlation Between Altair Engineering and WESTERN COPPER

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

By analyzing existing cross correlation between Altair Engineering and WESTERN PER, you can compare the effects of market volatilities on Altair Engineering and WESTERN COPPER 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 WESTERN COPPER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altair Engineering and WESTERN COPPER.

Diversification Opportunities for Altair Engineering and WESTERN COPPER

0.21

Correlation Coefficient

Altair Engineering  WESTERN COPPER

Modest diversification

The 3 months correlation between Altair and WESTERN is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering and WESTERN PER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTERN COPPER 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 WESTERN COPPER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESTERN COPPER has no effect on the direction of Altair Engineering i.e., Altair Engineering and WESTERN COPPER go up and down completely randomly.

Pair Corralation between Altair Engineering and WESTERN COPPER

Assuming the 90 days horizon Altair Engineering is expected to under-perform the WESTERN COPPER. But the stock apears to be less risky and, when comparing its historical volatility, Altair Engineering is 4.27 times less risky than WESTERN COPPER. The stock trades about -0.05 of its potential returns per unit of risk. The WESTERN PER is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  97.00  in WESTERN PER on December 22, 2024 and sell it today you would earn a total of  7.00  from holding WESTERN PER or generate 7.22% return on investment over 90 days.

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

Altair Engineering  vs.  WESTERN PER

Altair Engineering

Risk-Adjusted Performance

Very Weak

Over the last 90 days Altair Engineering has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Altair Engineering is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

WESTERN COPPER

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WESTERN PER are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, WESTERN COPPER may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Altair Engineering and WESTERN COPPER

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

The idea behind Altair Engineering and WESTERN PER 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.