Correlation Between Altair Engineering and Seven West

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

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

Diversification Opportunities for Altair Engineering and Seven West

-0.78

Correlation Coefficient

Altair Engineering  Seven West

Pay attention - limited upside

The 3 months correlation between Altair and Seven is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering and Seven West Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seven West Media 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 Seven West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seven West Media has no effect on the direction of Altair Engineering i.e., Altair Engineering and Seven West go up and down completely randomly.

Pair Corralation between Altair Engineering and Seven West

Assuming the 90 days horizon Altair Engineering is expected to generate 2.31 times less return on investment than Seven West. But when comparing it to its historical volatility, Altair Engineering is 11.23 times less risky than Seven West. It trades about 0.51 of its potential returns per unit of risk. Seven West Media is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  7.90  in Seven West Media on October 12, 2024 and sell it today you would earn a total of  0.75  from holding Seven West Media or generate 9.49% 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.  Seven West Media

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.

Seven West Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seven West Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Seven West is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Altair Engineering and Seven West

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

The idea behind Altair Engineering and Seven West Media 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.