Correlation Between Altair Engineering and ConocoPhillips

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

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

Diversification Opportunities for Altair Engineering and ConocoPhillips

-0.16

Correlation Coefficient

Altair Engineering  ConocoPhillips

Good diversification

The 3 months correlation between Altair and ConocoPhillips is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering and ConocoPhillips in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConocoPhillips 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 ConocoPhillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConocoPhillips has no effect on the direction of Altair Engineering i.e., Altair Engineering and ConocoPhillips go up and down completely randomly.

Pair Corralation between Altair Engineering and ConocoPhillips

Assuming the 90 days horizon Altair Engineering is expected to generate 1.23 times more return on investment than ConocoPhillips. However, Altair Engineering is 1.23 times more volatile than ConocoPhillips. It trades about 0.09 of its potential returns per unit of risk. ConocoPhillips is currently generating about 0.0 per unit of risk. If you would invest  4,780  in Altair Engineering on October 11, 2024 and sell it today you would earn a total of  5,720  from holding Altair Engineering or generate 119.67% return on investment over 90 days.

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

Altair Engineering  vs.  ConocoPhillips

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.

ConocoPhillips

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Altair Engineering and ConocoPhillips 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.