Correlation Between ANTA Sports and Altair Engineering

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

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

Diversification Opportunities for ANTA Sports and Altair Engineering

-0.5

Correlation Coefficient

ANTA Sports  Altair Engineering

Very good diversification

The 3 months correlation between ANTA and Altair is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding ANTA Sports Products and Altair Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair Engineering and ANTA Sports 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 ANTA Sports Products are associated (or correlated) with Altair Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altair Engineering has no effect on the direction of ANTA Sports i.e., ANTA Sports and Altair Engineering go up and down completely randomly.

Pair Corralation between ANTA Sports and Altair Engineering

Assuming the 90 days trading horizon ANTA Sports Products is expected to generate 3.45 times more return on investment than Altair Engineering. However, ANTA Sports is 3.45 times more volatile than Altair Engineering. It trades about 0.05 of its potential returns per unit of risk. Altair Engineering is currently generating about -0.02 per unit of risk. If you would invest  985.00  in ANTA Sports Products on December 27, 2024 and sell it today you would earn a total of  56.00  from holding ANTA Sports Products or generate 5.69% return on investment over 90 days.

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

ANTA Sports Products  vs.  Altair Engineering

ANTA Sports Products

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ANTA Sports Products are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, ANTA Sports may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Altair Engineering

Risk-Adjusted Performance

Very Weak

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

Pair Trading with ANTA Sports and Altair Engineering

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

The idea behind ANTA Sports Products and Altair Engineering 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.