Correlation Between CHINA SOUTHN and Altair Engineering
Can any of the company-specific risk be diversified away by investing in both CHINA SOUTHN 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 SOUTHN 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 SOUTHN AIR H and Altair Engineering, you can compare the effects of market volatilities on CHINA SOUTHN 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 SOUTHN with a short position of Altair Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA SOUTHN and Altair Engineering.
Diversification Opportunities for CHINA SOUTHN and Altair Engineering
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CHINA and Altair is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding CHINA SOUTHN AIR H and Altair Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair Engineering and CHINA SOUTHN 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 SOUTHN AIR H 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 SOUTHN i.e., CHINA SOUTHN and Altair Engineering go up and down completely randomly.
Pair Corralation between CHINA SOUTHN and Altair Engineering
Assuming the 90 days trading horizon CHINA SOUTHN AIR H is expected to generate 2.33 times more return on investment than Altair Engineering. However, CHINA SOUTHN is 2.33 times more volatile than Altair Engineering. It trades about 0.08 of its potential returns per unit of risk. Altair Engineering is currently generating about 0.17 per unit of risk. If you would invest 33.00 in CHINA SOUTHN AIR H on November 3, 2024 and sell it today you would earn a total of 12.00 from holding CHINA SOUTHN AIR H or generate 36.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA SOUTHN AIR H vs. Altair Engineering
Performance |
| Timeline |
| CHINA SOUTHN AIR |
| Altair Engineering |
CHINA SOUTHN and Altair Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA SOUTHN and Altair Engineering
The main advantage of trading using opposite CHINA SOUTHN and Altair Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA SOUTHN 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 SOUTHN vs. Casio Computer CoLtd | CHINA SOUTHN vs. SINGAPORE AIRLINES | CHINA SOUTHN vs. AECOM TECHNOLOGY | CHINA SOUTHN vs. Kingdee International Software |
| Altair Engineering vs. Geely Automobile Holdings | Altair Engineering vs. MUTUIONLINE | Altair Engineering vs. Cars Inc | Altair Engineering vs. PACIFIC ONLINE |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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