Correlation Between Altair Engineering and Sekisui Chemical

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

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

Diversification Opportunities for Altair Engineering and Sekisui Chemical

0.4

Correlation Coefficient

Altair Engineering  Sekisui Chemical

Very weak diversification

The 3 months correlation between Altair and Sekisui is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering and Sekisui Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekisui Chemical 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 Sekisui Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sekisui Chemical has no effect on the direction of Altair Engineering i.e., Altair Engineering and Sekisui Chemical go up and down completely randomly.

Pair Corralation between Altair Engineering and Sekisui Chemical

Given the investment horizon of 90 days Altair Engineering is expected to generate 3.12 times more return on investment than Sekisui Chemical. However, Altair Engineering is 3.12 times more volatile than Sekisui Chemical Co. It trades about 0.08 of its potential returns per unit of risk. Sekisui Chemical Co is currently generating about 0.05 per unit of risk. If you would invest  5,193  in Altair Engineering on October 11, 2024 and sell it today you would earn a total of  5,830  from holding Altair Engineering or generate 112.27% 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.  Sekisui Chemical Co

Altair Engineering

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Altair Engineering are ranked lower than 11 (%) 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.

Sekisui Chemical

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sekisui Chemical Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sekisui Chemical may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Altair Engineering and Sekisui Chemical

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

The idea behind Altair Engineering and Sekisui Chemical Co 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.