Correlation Between DATA MODUL and Altair Engineering

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

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

Diversification Opportunities for DATA MODUL and Altair Engineering

-0.39

Correlation Coefficient

DATA MODUL  Altair Engineering

Very good diversification

The 3 months correlation between DATA and Altair is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding DATA MODUL and Altair Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair Engineering and DATA MODUL 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 DATA MODUL 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 DATA MODUL i.e., DATA MODUL and Altair Engineering go up and down completely randomly.

Pair Corralation between DATA MODUL and Altair Engineering

Assuming the 90 days trading horizon DATA MODUL is expected to generate 3.54 times more return on investment than Altair Engineering. However, DATA MODUL is 3.54 times more volatile than Altair Engineering. It trades about -0.01 of its potential returns per unit of risk. Altair Engineering is currently generating about -0.04 per unit of risk. If you would invest  2,680  in DATA MODUL on December 20, 2024 and sell it today you would lose (80.00) from holding DATA MODUL or give up 2.99% of portfolio value over 90 days.

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

DATA MODUL   vs.  Altair Engineering

DATA MODUL

Risk-Adjusted Performance

Very Weak

Over the last 90 days DATA MODUL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, DATA MODUL is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with DATA MODUL and Altair Engineering

The main advantage of trading using opposite DATA MODUL and Altair Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DATA MODUL 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 DATA MODUL 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.