Correlation Between Altair Engineering and MYFAIR GOLD

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

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

Diversification Opportunities for Altair Engineering and MYFAIR GOLD

-0.36

Correlation Coefficient

Altair Engineering  MYFAIR GOLD

Very good diversification

The 3 months correlation between Altair and MYFAIR is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering and MYFAIR GOLD P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MYFAIR GOLD P 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 MYFAIR GOLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MYFAIR GOLD P has no effect on the direction of Altair Engineering i.e., Altair Engineering and MYFAIR GOLD go up and down completely randomly.

Pair Corralation between Altair Engineering and MYFAIR GOLD

Assuming the 90 days horizon Altair Engineering is expected to generate 0.33 times more return on investment than MYFAIR GOLD. However, Altair Engineering is 3.05 times less risky than MYFAIR GOLD. It trades about 0.42 of its potential returns per unit of risk. MYFAIR GOLD P is currently generating about -0.41 per unit of risk. If you would invest  10,000  in Altair Engineering on October 5, 2024 and sell it today you would earn a total of  400.00  from holding Altair Engineering or generate 4.0% return on investment over 90 days.

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

Altair Engineering  vs.  MYFAIR GOLD P

Altair Engineering

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Altair Engineering has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Altair Engineering reported solid returns over the last few months and may actually be approaching a breakup point.

MYFAIR GOLD P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MYFAIR GOLD P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Altair Engineering and MYFAIR GOLD

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

The idea behind Altair Engineering and MYFAIR GOLD P 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.