Correlation Between Altair Engineering and Adyen NV
Can any of the company-specific risk be diversified away by investing in both Altair Engineering and Adyen NV 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 Engineering and Adyen NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altair Engineering and Adyen NV, you can compare the effects of market volatilities on Altair Engineering and Adyen NV 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 Engineering with a short position of Adyen NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altair Engineering and Adyen NV.
Diversification Opportunities for Altair Engineering and Adyen NV
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Altair and Adyen is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering and Adyen NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adyen NV and Altair Engineering 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 Engineering are associated (or correlated) with Adyen NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adyen NV has no effect on the direction of Altair Engineering i.e., Altair Engineering and Adyen NV go up and down completely randomly.
Pair Corralation between Altair Engineering and Adyen NV
Assuming the 90 days horizon Altair Engineering is expected to generate 0.76 times more return on investment than Adyen NV. However, Altair Engineering is 1.32 times less risky than Adyen NV. It trades about 0.08 of its potential returns per unit of risk. Adyen NV is currently generating about 0.04 per unit of risk. If you would invest 6,800 in Altair Engineering on September 12, 2024 and sell it today you would earn a total of 3,300 from holding Altair Engineering or generate 48.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Altair Engineering vs. Adyen NV
Performance |
| Timeline |
| Altair Engineering |
| Adyen NV |
Altair Engineering and Adyen NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Altair Engineering and Adyen NV
The main advantage of trading using opposite Altair Engineering and Adyen NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altair Engineering position performs unexpectedly, Adyen NV 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 Adyen NV will offset losses from the drop in Adyen NV's long position.| Altair Engineering vs. Adyen NV | Altair Engineering vs. Superior Plus Corp | Altair Engineering vs. SIVERS SEMICONDUCTORS AB | Altair Engineering vs. Norsk Hydro ASA |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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