Correlation Between Altair Engineering and East Japan
Can any of the company-specific risk be diversified away by investing in both Altair Engineering and East Japan 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 East Japan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altair Engineering and East Japan Railway, you can compare the effects of market volatilities on Altair Engineering and East Japan 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 East Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altair Engineering and East Japan.
Diversification Opportunities for Altair Engineering and East Japan
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Altair and East is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering and East Japan Railway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Japan Railway 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 East Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Japan Railway has no effect on the direction of Altair Engineering i.e., Altair Engineering and East Japan go up and down completely randomly.
Pair Corralation between Altair Engineering and East Japan
Assuming the 90 days horizon Altair Engineering is expected to generate 1.06 times more return on investment than East Japan. However, Altair Engineering is 1.06 times more volatile than East Japan Railway. It trades about 0.06 of its potential returns per unit of risk. East Japan Railway is currently generating about -0.02 per unit of risk. If you would invest 8,100 in Altair Engineering on October 29, 2024 and sell it today you would earn a total of 2,400 from holding Altair Engineering or generate 29.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Altair Engineering vs. East Japan Railway
Performance |
| Timeline |
| Altair Engineering |
| East Japan Railway |
Altair Engineering and East Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Altair Engineering and East Japan
The main advantage of trading using opposite Altair Engineering and East Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altair Engineering position performs unexpectedly, East Japan 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 East Japan will offset losses from the drop in East Japan's long position.| Altair Engineering vs. PENN NATL GAMING | Altair Engineering vs. Games Workshop Group | Altair Engineering vs. FRACTAL GAMING GROUP | Altair Engineering vs. GameStop Corp |
| East Japan vs. Salesforce | East Japan vs. CODERE ONLINE LUX | East Japan vs. USWE SPORTS AB | East Japan vs. Air Transport Services |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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