Correlation Between East Japan and Altair Engineering
Can any of the company-specific risk be diversified away by investing in both East Japan 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 East Japan and Altair Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between East Japan Railway and Altair Engineering, you can compare the effects of market volatilities on East Japan 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 East Japan with a short position of Altair Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of East Japan and Altair Engineering.
Diversification Opportunities for East Japan and Altair Engineering
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between East and Altair is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding East Japan Railway and Altair Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair Engineering and East Japan 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 East Japan Railway 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 East Japan i.e., East Japan and Altair Engineering go up and down completely randomly.
Pair Corralation between East Japan and Altair Engineering
Assuming the 90 days horizon East Japan Railway is expected to under-perform the Altair Engineering. In addition to that, East Japan is 2.32 times more volatile than Altair Engineering. It trades about -0.14 of its total potential returns per unit of risk. Altair Engineering is currently generating about 0.21 per unit of volatility. If you would invest 10,000 in Altair Engineering on October 29, 2024 and sell it today you would earn a total of 500.00 from holding Altair Engineering or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
East Japan Railway vs. Altair Engineering
Performance |
| Timeline |
| East Japan Railway |
| Altair Engineering |
East Japan and Altair Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East Japan and Altair Engineering
The main advantage of trading using opposite East Japan and Altair Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East Japan 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.| East Japan vs. Salesforce | East Japan vs. CODERE ONLINE LUX | East Japan vs. USWE SPORTS AB | East Japan vs. Air Transport Services |
| Altair Engineering vs. PENN NATL GAMING | Altair Engineering vs. Games Workshop Group | Altair Engineering vs. FRACTAL GAMING GROUP | Altair Engineering vs. GameStop Corp |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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