Correlation Between Altair Engineering and Vicinity Centres

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

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

Diversification Opportunities for Altair Engineering and Vicinity Centres

-0.69

Correlation Coefficient

Altair Engineering  Vicinity Centres

Excellent diversification

The 3 months correlation between Altair and Vicinity is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering and Vicinity Centres in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vicinity Centres 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 Vicinity Centres. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vicinity Centres has no effect on the direction of Altair Engineering i.e., Altair Engineering and Vicinity Centres go up and down completely randomly.

Pair Corralation between Altair Engineering and Vicinity Centres

Assuming the 90 days horizon Altair Engineering is expected to generate 1.29 times more return on investment than Vicinity Centres. However, Altair Engineering is 1.29 times more volatile than Vicinity Centres. It trades about 0.09 of its potential returns per unit of risk. Vicinity Centres is currently generating about 0.02 per unit of risk. If you would invest  4,860  in Altair Engineering on October 22, 2024 and sell it today you would earn a total of  5,840  from holding Altair Engineering or generate 120.16% return on investment over 90 days.

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

Altair Engineering  vs.  Vicinity Centres

Altair Engineering

Risk-Adjusted Performance

13 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Altair Engineering are ranked lower than 13 (%) 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.

Vicinity Centres

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vicinity Centres has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Vicinity Centres 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 Vicinity Centres

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

The idea behind Altair Engineering and Vicinity Centres 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.