Correlation Between Altair International and United Tractors

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

By analyzing existing cross correlation between Altair International Corp and United Tractors Tbk, you can compare the effects of market volatilities on Altair International and United Tractors 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 International with a short position of United Tractors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altair International and United Tractors.

Diversification Opportunities for Altair International and United Tractors

-0.13

Correlation Coefficient

Altair International  United Tractors

Good diversification

The 3 months correlation between Altair and United is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Altair International Corp and United Tractors Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Tractors Tbk and Altair International 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 International Corp are associated (or correlated) with United Tractors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Tractors Tbk has no effect on the direction of Altair International i.e., Altair International and United Tractors go up and down completely randomly.

Pair Corralation between Altair International and United Tractors

Given the investment horizon of 90 days Altair International Corp is expected to generate 5.82 times more return on investment than United Tractors. However, Altair International is 5.82 times more volatile than United Tractors Tbk. It trades about 0.04 of its potential returns per unit of risk. United Tractors Tbk is currently generating about -0.1 per unit of risk. If you would invest  4.80  in Altair International Corp on September 26, 2024 and sell it today you would lose (0.70) from holding Altair International Corp or give up 14.58% of portfolio value over 90 days.

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

Altair International Corp  vs.  United Tractors Tbk

Altair International Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Altair International Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Altair International displayed solid returns over the last few months and may actually be approaching a breakup point.

United Tractors Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Tractors Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Altair International and United Tractors

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

The idea behind Altair International Corp and United Tractors Tbk 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 Anywhere module to track or share privately all of your investments from the convenience of any device.