Correlation Between Altium and Enghouse Systems

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

By analyzing existing cross correlation between Altium Limited and Enghouse Systems Limited, you can compare the effects of market volatilities on Altium and Enghouse Systems 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 Altium with a short position of Enghouse Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altium and Enghouse Systems.

Diversification Opportunities for Altium and Enghouse Systems

0.0

Correlation Coefficient

Altium  Enghouse Systems

Pay attention - limited upside

The 3 months correlation between Altium and Enghouse is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Altium Limited and Enghouse Systems Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enghouse Systems and Altium 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 Altium Limited are associated (or correlated) with Enghouse Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enghouse Systems has no effect on the direction of Altium i.e., Altium and Enghouse Systems go up and down completely randomly.

Pair Corralation between Altium and Enghouse Systems

If you would invest (100.00) in Altium Limited on December 21, 2024 and sell it today you would earn a total of  100.00  from holding Altium Limited or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Altium Limited  vs.  Enghouse Systems Limited

Altium Limited

Risk-Adjusted Performance

Very Weak

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

Enghouse Systems

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Altium and Enghouse Systems

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

The idea behind Altium Limited and Enghouse Systems Limited 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.