Correlation Between KENEDIX OFFICE and Altair Engineering

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

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

Diversification Opportunities for KENEDIX OFFICE and Altair Engineering

0.4

Correlation Coefficient

KENEDIX OFFICE  Altair Engineering

Very weak diversification

The 3 months correlation between KENEDIX and Altair is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding KENEDIX OFFICE INV and Altair Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair Engineering and KENEDIX OFFICE 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 KENEDIX OFFICE INV 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 KENEDIX OFFICE i.e., KENEDIX OFFICE and Altair Engineering go up and down completely randomly.

Pair Corralation between KENEDIX OFFICE and Altair Engineering

Assuming the 90 days horizon KENEDIX OFFICE INV is expected to generate 3.08 times more return on investment than Altair Engineering. However, KENEDIX OFFICE is 3.08 times more volatile than Altair Engineering. It trades about 0.08 of its potential returns per unit of risk. Altair Engineering is currently generating about 0.18 per unit of risk. If you would invest  87,000  in KENEDIX OFFICE INV on October 23, 2024 and sell it today you would earn a total of  2,000  from holding KENEDIX OFFICE INV or generate 2.3% return on investment over 90 days.

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

KENEDIX OFFICE INV  vs.  Altair Engineering

KENEDIX OFFICE INV

Risk-Adjusted Performance

0 of 100

Very Weak

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

Altair Engineering

Risk-Adjusted Performance

8 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Altair Engineering are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Altair Engineering may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with KENEDIX OFFICE and Altair Engineering

The main advantage of trading using opposite KENEDIX OFFICE and Altair Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KENEDIX OFFICE 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 KENEDIX OFFICE INV 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.