Correlation Between USU Software and Altair Engineering
Can any of the company-specific risk be diversified away by investing in both USU Software 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 USU Software and Altair Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between USU Software AG and Altair Engineering, you can compare the effects of market volatilities on USU Software 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 USU Software with a short position of Altair Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of USU Software and Altair Engineering.
Diversification Opportunities for USU Software and Altair Engineering
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between USU and Altair is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding USU Software AG and Altair Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair Engineering and USU Software 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 USU Software AG 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 USU Software i.e., USU Software and Altair Engineering go up and down completely randomly.
Pair Corralation between USU Software and Altair Engineering
Assuming the 90 days trading horizon USU Software is expected to generate 5.14 times less return on investment than Altair Engineering. In addition to that, USU Software is 1.0 times more volatile than Altair Engineering. It trades about 0.02 of its total potential returns per unit of risk. Altair Engineering is currently generating about 0.08 per unit of volatility. If you would invest 5,350 in Altair Engineering on October 25, 2024 and sell it today you would earn a total of 5,250 from holding Altair Engineering or generate 98.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
USU Software AG vs. Altair Engineering
Performance |
| Timeline |
| USU Software AG |
| Altair Engineering |
USU Software and Altair Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with USU Software and Altair Engineering
The main advantage of trading using opposite USU Software and Altair Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USU Software 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.| USU Software vs. GREENX METALS LTD | USU Software vs. Align Technology | USU Software vs. Charter Communications | USU Software vs. Zijin Mining Group |
| Altair Engineering vs. Cognizant Technology Solutions | Altair Engineering vs. X FAB Silicon Foundries | Altair Engineering vs. CanSino Biologics | Altair Engineering vs. GREENX METALS LTD |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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