Correlation Between Altair Engineering and PACIFIC

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

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

Diversification Opportunities for Altair Engineering and PACIFIC

-0.54

Correlation Coefficient

Altair Engineering  PACIFIC

Excellent diversification

The 3 months correlation between Altair and PACIFIC is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering and PACIFIC GAS AND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACIFIC GAS AND 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 PACIFIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACIFIC GAS AND has no effect on the direction of Altair Engineering i.e., Altair Engineering and PACIFIC go up and down completely randomly.

Pair Corralation between Altair Engineering and PACIFIC

Given the investment horizon of 90 days Altair Engineering is expected to generate 2.58 times more return on investment than PACIFIC. However, Altair Engineering is 2.58 times more volatile than PACIFIC GAS AND. It trades about 0.14 of its potential returns per unit of risk. PACIFIC GAS AND is currently generating about -0.09 per unit of risk. If you would invest  9,500  in Altair Engineering on October 10, 2024 and sell it today you would earn a total of  1,523  from holding Altair Engineering or generate 16.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.32%
Values	Daily Returns

Altair Engineering  vs.  PACIFIC GAS AND

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.

PACIFIC GAS AND

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PACIFIC GAS AND has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PACIFIC is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Altair Engineering and PACIFIC

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

The idea behind Altair Engineering and PACIFIC GAS AND 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.