Correlation Between China Communications and Altair Engineering
Can any of the company-specific risk be diversified away by investing in both China Communications 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 China Communications and Altair Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Communications Services and Altair Engineering, you can compare the effects of market volatilities on China Communications 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 China Communications with a short position of Altair Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Communications and Altair Engineering.
Diversification Opportunities for China Communications and Altair Engineering
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Altair is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding China Communications Services and Altair Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair Engineering and China Communications 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 China Communications Services 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 China Communications i.e., China Communications and Altair Engineering go up and down completely randomly.
Pair Corralation between China Communications and Altair Engineering
Assuming the 90 days horizon China Communications Services is expected to under-perform the Altair Engineering. In addition to that, China Communications is 2.48 times more volatile than Altair Engineering. It trades about -0.06 of its total potential returns per unit of risk. Altair Engineering is currently generating about 0.0 per unit of volatility. If you would invest 10,600 in Altair Engineering on November 3, 2024 and sell it today you would earn a total of 0.00 from holding Altair Engineering or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Communications Services vs. Altair Engineering
Performance |
| Timeline |
| China Communications |
| Altair Engineering |
China Communications and Altair Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Communications and Altair Engineering
The main advantage of trading using opposite China Communications and Altair Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Communications 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.| China Communications vs. T Mobile | China Communications vs. China Mobile Limited | China Communications vs. Verizon Communications | China Communications vs. ATT Inc |
| Altair Engineering vs. Microsoft | Altair Engineering vs. Adobe Inc | Altair Engineering vs. ADYEN NV UNSPADR001 | Altair Engineering vs. Square Inc |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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