Correlation Between Altair Engineering and CONICO

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

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

Diversification Opportunities for Altair Engineering and CONICO

0.32

Correlation Coefficient

Altair Engineering  CONICO

Weak diversification

The 3 months correlation between Altair and CONICO is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering and CONICO LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONICO LTD 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 CONICO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONICO LTD has no effect on the direction of Altair Engineering i.e., Altair Engineering and CONICO go up and down completely randomly.

Pair Corralation between Altair Engineering and CONICO

Assuming the 90 days horizon Altair Engineering is expected to under-perform the CONICO. But the stock apears to be less risky and, when comparing its historical volatility, Altair Engineering is 46.2 times less risky than CONICO. The stock trades about -0.02 of its potential returns per unit of risk. The CONICO LTD is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.40  in CONICO LTD on December 28, 2024 and sell it today you would lose (0.18) from holding CONICO LTD or give up 45.0% of portfolio value over 90 days.

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

Altair Engineering  vs.  CONICO LTD

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

CONICO LTD

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CONICO LTD are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CONICO reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Altair Engineering and CONICO

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

The idea behind Altair Engineering and CONICO LTD 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.