Correlation Between Playstudios and Altair Engineering

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

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

Diversification Opportunities for Playstudios and Altair Engineering

0.03

Correlation Coefficient

Playstudios  Altair Engineering

Significant diversification

The 3 months correlation between Playstudios and Altair is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Playstudios and Altair Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair Engineering and Playstudios 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 Playstudios 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 Playstudios i.e., Playstudios and Altair Engineering go up and down completely randomly.

Pair Corralation between Playstudios and Altair Engineering

Given the investment horizon of 90 days Playstudios is expected to under-perform the Altair Engineering. In addition to that, Playstudios is 1.63 times more volatile than Altair Engineering. It trades about -0.04 of its total potential returns per unit of risk. Altair Engineering is currently generating about 0.08 per unit of volatility. If you would invest  5,707  in Altair Engineering on October 26, 2024 and sell it today you would earn a total of  5,331  from holding Altair Engineering or generate 93.41% return on investment over 90 days.

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

Playstudios  vs.  Altair Engineering

Playstudios

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Playstudios are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Playstudios unveiled solid returns over the last few months and may actually be approaching a breakup point.

Altair Engineering

Risk-Adjusted Performance

8 of 100

OK

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. Even with relatively weak basic indicators, Altair Engineering may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Playstudios and Altair Engineering

The main advantage of trading using opposite Playstudios and Altair Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playstudios 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 Playstudios 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.