Correlation Between Altair Engineering and Unilever PLC

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

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

Diversification Opportunities for Altair Engineering and Unilever PLC

-0.02

Correlation Coefficient

Altair Engineering  Unilever PLC

Good diversification

The 3 months correlation between Altair and Unilever is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering and Unilever PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unilever PLC 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 Unilever PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unilever PLC has no effect on the direction of Altair Engineering i.e., Altair Engineering and Unilever PLC go up and down completely randomly.

Pair Corralation between Altair Engineering and Unilever PLC

Assuming the 90 days horizon Altair Engineering is expected to under-perform the Unilever PLC. But the stock apears to be less risky and, when comparing its historical volatility, Altair Engineering is 2.3 times less risky than Unilever PLC. The stock trades about -0.02 of its potential returns per unit of risk. The Unilever PLC is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  5,356  in Unilever PLC on December 30, 2024 and sell it today you would lose (6.00) from holding Unilever PLC or give up 0.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Altair Engineering  vs.  Unilever PLC

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

Unilever PLC

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Altair Engineering and Unilever PLC 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 Transaction History module to view history of all your transactions and understand their impact on performance.