Correlation Between Altair Engineering and Japan Tobacco
Can any of the company-specific risk be diversified away by investing in both Altair Engineering and Japan Tobacco 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 Japan Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altair Engineering and Japan Tobacco, you can compare the effects of market volatilities on Altair Engineering and Japan Tobacco 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 Japan Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altair Engineering and Japan Tobacco.
Diversification Opportunities for Altair Engineering and Japan Tobacco
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Altair and Japan is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering and Japan Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Tobacco 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 Japan Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Tobacco has no effect on the direction of Altair Engineering i.e., Altair Engineering and Japan Tobacco go up and down completely randomly.
Pair Corralation between Altair Engineering and Japan Tobacco
Assuming the 90 days horizon Altair Engineering is expected to generate 1.43 times more return on investment than Japan Tobacco. However, Altair Engineering is 1.43 times more volatile than Japan Tobacco. It trades about 0.08 of its potential returns per unit of risk. Japan Tobacco 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 3,200 from holding Altair Engineering or generate 47.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Altair Engineering vs. Japan Tobacco
Performance |
| Timeline |
| Altair Engineering |
| Japan Tobacco |
Altair Engineering and Japan Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Altair Engineering and Japan Tobacco
The main advantage of trading using opposite Altair Engineering and Japan Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altair Engineering position performs unexpectedly, Japan Tobacco 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 Japan Tobacco will offset losses from the drop in Japan Tobacco'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 |
| Japan Tobacco vs. TEXAS ROADHOUSE | Japan Tobacco vs. COPLAND ROAD CAPITAL | Japan Tobacco vs. QUEEN S ROAD | Japan Tobacco vs. Kaufman Broad SA |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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