Correlation Between Altair Engineering and Dairy Farm

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

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

Diversification Opportunities for Altair Engineering and Dairy Farm

0.76

Correlation Coefficient

Altair Engineering  Dairy Farm

Poor diversification

The 3 months correlation between Altair and Dairy is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering and Dairy Farm International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dairy Farm International 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 Dairy Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dairy Farm International has no effect on the direction of Altair Engineering i.e., Altair Engineering and Dairy Farm go up and down completely randomly.

Pair Corralation between Altair Engineering and Dairy Farm

Assuming the 90 days horizon Altair Engineering is expected to generate 0.4 times more return on investment than Dairy Farm. However, Altair Engineering is 2.49 times less risky than Dairy Farm. It trades about 0.51 of its potential returns per unit of risk. Dairy Farm International is currently generating about 0.01 per unit of risk. If you would invest  10,000  in Altair Engineering on October 12, 2024 and sell it today you would earn a total of  600.00  from holding Altair Engineering or generate 6.0% return on investment over 90 days.

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

Altair Engineering  vs.  Dairy Farm International

Altair Engineering

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Altair Engineering are ranked lower than 16 (%) 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.

Dairy Farm International

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dairy Farm International are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Dairy Farm reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Altair Engineering and Dairy Farm

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

The idea behind Altair Engineering and Dairy Farm International 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.