Correlation Between Altair Engineering and ALTAIR RES

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

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

Diversification Opportunities for Altair Engineering and ALTAIR RES

0.0

Correlation Coefficient

Altair Engineering  ALTAIR RES

Pay attention - limited upside

The 3 months correlation between Altair and ALTAIR is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering and ALTAIR RES INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALTAIR RES INC 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 ALTAIR RES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALTAIR RES INC has no effect on the direction of Altair Engineering i.e., Altair Engineering and ALTAIR RES go up and down completely randomly.

Pair Corralation between Altair Engineering and ALTAIR RES

Assuming the 90 days horizon Altair Engineering is expected to generate 21.79 times less return on investment than ALTAIR RES. But when comparing it to its historical volatility, Altair Engineering is 27.41 times less risky than ALTAIR RES. It trades about 0.1 of its potential returns per unit of risk. ALTAIR RES INC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.40  in ALTAIR RES INC on September 17, 2024 and sell it today you would lose (0.35) from holding ALTAIR RES INC or give up 87.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Altair Engineering  vs.  ALTAIR RES INC

Altair Engineering

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Altair Engineering are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Altair Engineering reported solid returns over the last few months and may actually be approaching a breakup point.

ALTAIR RES INC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Altair Engineering and ALTAIR RES

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

The idea behind Altair Engineering and ALTAIR RES INC 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.