Correlation Between Altair Engineering and Evertec

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

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

Diversification Opportunities for Altair Engineering and Evertec

0.46

Correlation Coefficient

Altair Engineering  Evertec

Very weak diversification

The 3 months correlation between Altair and Evertec is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering and Evertec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evertec 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 Evertec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evertec has no effect on the direction of Altair Engineering i.e., Altair Engineering and Evertec go up and down completely randomly.

Pair Corralation between Altair Engineering and Evertec

Given the investment horizon of 90 days Altair Engineering is expected to generate 1.23 times more return on investment than Evertec. However, Altair Engineering is 1.23 times more volatile than Evertec. It trades about 0.09 of its potential returns per unit of risk. Evertec is currently generating about 0.02 per unit of risk. If you would invest  4,547  in Altair Engineering on September 20, 2024 and sell it today you would earn a total of  6,138  from holding Altair Engineering or generate 134.99% return on investment over 90 days.

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

Altair Engineering  vs.  Evertec

Altair Engineering

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Altair Engineering are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Altair Engineering reported solid returns over the last few months and may actually be approaching a breakup point.

Evertec

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Evertec are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Evertec is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Altair Engineering and Evertec

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

The idea behind Altair Engineering and Evertec 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.