Correlation Between Japan Tobacco and Altair Engineering
Can any of the company-specific risk be diversified away by investing in both Japan Tobacco 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 Japan Tobacco and Altair Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Tobacco and Altair Engineering, you can compare the effects of market volatilities on Japan Tobacco 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 Japan Tobacco with a short position of Altair Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Tobacco and Altair Engineering.
Diversification Opportunities for Japan Tobacco and Altair Engineering
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Japan and Altair is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Japan Tobacco and Altair Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair Engineering and Japan Tobacco 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 Japan Tobacco 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 Japan Tobacco i.e., Japan Tobacco and Altair Engineering go up and down completely randomly.
Pair Corralation between Japan Tobacco and Altair Engineering
Assuming the 90 days horizon Japan Tobacco is expected to generate 3.01 times less return on investment than Altair Engineering. In addition to that, Japan Tobacco is 2.01 times more volatile than Altair Engineering. It trades about 0.03 of its total potential returns per unit of risk. Altair Engineering is currently generating about 0.17 per unit of volatility. If you would invest 9,750 in Altair Engineering on September 13, 2024 and sell it today you would earn a total of 250.00 from holding Altair Engineering or generate 2.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Tobacco vs. Altair Engineering
Performance |
| Timeline |
| Japan Tobacco |
| Altair Engineering |
Japan Tobacco and Altair Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Tobacco and Altair Engineering
The main advantage of trading using opposite Japan Tobacco and Altair Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Tobacco 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.| Japan Tobacco vs. PARKEN Sport Entertainment | Japan Tobacco vs. Commercial Vehicle Group | Japan Tobacco vs. Motorcar Parts of | Japan Tobacco vs. Carsales |
| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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