Correlation Between Altair Engineering and CSG Systems
Can any of the company-specific risk be diversified away by investing in both Altair Engineering and CSG Systems 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 CSG Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altair Engineering and CSG Systems International, you can compare the effects of market volatilities on Altair Engineering and CSG Systems 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 CSG Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altair Engineering and CSG Systems.
Diversification Opportunities for Altair Engineering and CSG Systems
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Altair and CSG is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering and CSG Systems International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSG Systems International 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 CSG Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSG Systems International has no effect on the direction of Altair Engineering i.e., Altair Engineering and CSG Systems go up and down completely randomly.
Pair Corralation between Altair Engineering and CSG Systems
Given the investment horizon of 90 days Altair Engineering is expected to under-perform the CSG Systems. But the stock apears to be less risky and, when comparing its historical volatility, Altair Engineering is 2.34 times less risky than CSG Systems. The stock trades about -0.2 of its potential returns per unit of risk. The CSG Systems International is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 4,762 in CSG Systems International on August 30, 2024 and sell it today you would earn a total of 697.00 from holding CSG Systems International or generate 14.64% 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. CSG Systems International
Performance |
| Timeline |
| Altair Engineering |
| CSG Systems International |
Altair Engineering and CSG Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Altair Engineering and CSG Systems
The main advantage of trading using opposite Altair Engineering and CSG Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altair Engineering position performs unexpectedly, CSG Systems 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 CSG Systems will offset losses from the drop in CSG Systems' long position.| Altair Engineering vs. Global Blue Group | Altair Engineering vs. EverCommerce | Altair Engineering vs. CSG Systems International | Altair Engineering vs. Consensus Cloud Solutions |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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