Correlation Between Altair Engineering and Bt Brands

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Can any of the company-specific risk be diversified away by investing in both Altair Engineering and Bt Brands 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 Bt Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altair Engineering and Bt Brands, you can compare the effects of market volatilities on Altair Engineering and Bt Brands 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 Bt Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altair Engineering and Bt Brands.

Diversification Opportunities for Altair Engineering and Bt Brands

-0.19
  Correlation Coefficient

Good diversification

The 3 months correlation between Altair and BTBD is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering and Bt Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bt Brands 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 Bt Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bt Brands has no effect on the direction of Altair Engineering i.e., Altair Engineering and Bt Brands go up and down completely randomly.

Pair Corralation between Altair Engineering and Bt Brands

Given the investment horizon of 90 days Altair Engineering is expected to generate 0.35 times more return on investment than Bt Brands. However, Altair Engineering is 2.82 times less risky than Bt Brands. It trades about 0.08 of its potential returns per unit of risk. Bt Brands is currently generating about 0.03 per unit of risk. If you would invest  5,497  in Altair Engineering on October 23, 2024 and sell it today you would earn a total of  5,544  from holding Altair Engineering or generate 100.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Altair Engineering  vs.  Bt Brands

 Performance 
       Timeline  
Altair Engineering 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Altair Engineering are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Altair Engineering is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.
Bt Brands 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Bt Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Bt Brands is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Altair Engineering and Bt Brands Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Altair Engineering and Bt Brands

The main advantage of trading using opposite Altair Engineering and Bt Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altair Engineering position performs unexpectedly, Bt Brands 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 Bt Brands will offset losses from the drop in Bt Brands' long position.
The idea behind Altair Engineering and Bt Brands 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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