Correlation Between Altair Engineering and ALGOMA STEEL
Can any of the company-specific risk be diversified away by investing in both Altair Engineering and ALGOMA STEEL 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 ALGOMA STEEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altair Engineering and ALGOMA STEEL GROUP, you can compare the effects of market volatilities on Altair Engineering and ALGOMA STEEL 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 ALGOMA STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altair Engineering and ALGOMA STEEL.
Diversification Opportunities for Altair Engineering and ALGOMA STEEL
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Altair and ALGOMA is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering and ALGOMA STEEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALGOMA STEEL GROUP 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 ALGOMA STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALGOMA STEEL GROUP has no effect on the direction of Altair Engineering i.e., Altair Engineering and ALGOMA STEEL go up and down completely randomly.
Pair Corralation between Altair Engineering and ALGOMA STEEL
Assuming the 90 days horizon Altair Engineering is expected to generate 2.94 times less return on investment than ALGOMA STEEL. But when comparing it to its historical volatility, Altair Engineering is 1.94 times less risky than ALGOMA STEEL. It trades about 0.17 of its potential returns per unit of risk. ALGOMA STEEL GROUP is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 900.00 in ALGOMA STEEL GROUP on August 28, 2024 and sell it today you would earn a total of 160.00 from holding ALGOMA STEEL GROUP or generate 17.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Altair Engineering vs. ALGOMA STEEL GROUP
Performance |
| Timeline |
| Altair Engineering |
| ALGOMA STEEL GROUP |
Altair Engineering and ALGOMA STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Altair Engineering and ALGOMA STEEL
The main advantage of trading using opposite Altair Engineering and ALGOMA STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altair Engineering position performs unexpectedly, ALGOMA STEEL 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 ALGOMA STEEL will offset losses from the drop in ALGOMA STEEL's long position.| Altair Engineering vs. BLUESCOPE STEEL | Altair Engineering vs. MYFAIR GOLD P | Altair Engineering vs. Insteel Industries | Altair Engineering vs. SYSTEMAIR AB |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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