Correlation Between BHP Group and Altair Engineering
Can any of the company-specific risk be diversified away by investing in both BHP Group and Altair Engineering 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 BHP Group and Altair Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BHP Group Limited and Altair Engineering, you can compare the effects of market volatilities on BHP Group and Altair Engineering 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 BHP Group with a short position of Altair Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Altair Engineering.
Diversification Opportunities for BHP Group and Altair Engineering
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between BHP and Altair is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Altair Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair Engineering and BHP Group 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 BHP Group Limited are associated (or correlated) with Altair Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altair Engineering has no effect on the direction of BHP Group i.e., BHP Group and Altair Engineering go up and down completely randomly.
Pair Corralation between BHP Group and Altair Engineering
Assuming the 90 days horizon BHP Group Limited is expected to generate 1.64 times more return on investment than Altair Engineering. However, BHP Group is 1.64 times more volatile than Altair Engineering. It trades about 0.11 of its potential returns per unit of risk. Altair Engineering is currently generating about 0.17 per unit of risk. If you would invest 4,910 in BHP Group Limited on September 13, 2024 and sell it today you would earn a total of 130.00 from holding BHP Group Limited or generate 2.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. Altair Engineering
Performance |
| Timeline |
| BHP Group Limited |
| Altair Engineering |
BHP Group and Altair Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Altair Engineering
The main advantage of trading using opposite BHP Group and Altair Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Altair Engineering 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 Altair Engineering will offset losses from the drop in Altair Engineering's long position.| BHP Group vs. Computershare Limited | BHP Group vs. Computer And Technologies | BHP Group vs. PT Indofood Sukses | BHP Group vs. Cogent Communications Holdings |
| Altair Engineering vs. Adyen NV | Altair Engineering vs. Superior Plus Corp | Altair Engineering vs. SIVERS SEMICONDUCTORS AB | Altair Engineering vs. Norsk Hydro ASA |
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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