Correlation Between Altair Engineering and Arbe Robotics

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Can any of the company-specific risk be diversified away by investing in both Altair Engineering and Arbe Robotics 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 Altair Engineering and Arbe Robotics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altair Engineering and Arbe Robotics, you can compare the effects of market volatilities on Altair Engineering and Arbe Robotics 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 Altair Engineering with a short position of Arbe Robotics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altair Engineering and Arbe Robotics.

Diversification Opportunities for Altair Engineering and Arbe Robotics

0.43
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Altair and Arbe Robotics is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering Inc and Arbe Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbe Robotics and Altair Engineering 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 Altair Engineering are associated (or correlated) with Arbe Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbe Robotics has no effect on the direction of Altair Engineering i.e., Altair Engineering and Arbe Robotics go up and down completely randomly.

Pair Corralation between Altair Engineering and Arbe Robotics

Given the investment horizon of 90 days Altair Engineering is expected to generate 0.53 times more return on investment than Arbe Robotics. However, Altair Engineering is 1.87 times less risky than Arbe Robotics. It trades about -0.04 of its potential returns per unit of risk. Arbe Robotics is currently generating about -0.05 per unit of risk. If you would invest  6,100  in Altair Engineering on April 6, 2022 and sell it today you would lose (753.00)  from holding Altair Engineering or give up 12.34% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Altair Engineering Inc  vs.  Arbe Robotics

 Performance (%) 
      Timeline 
Altair Engineering 
Altair Performance
0 of 100
Over the last 90 days Altair Engineering has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in August 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Altair Price Channel

Arbe Robotics 
Arbe Robotics Performance
0 of 100
Over the last 90 days Arbe Robotics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in August 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Arbe Robotics Price Channel

Altair Engineering and Arbe Robotics Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Altair Engineering and Arbe Robotics

The main advantage of trading using opposite Altair Engineering and Arbe Robotics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altair Engineering position performs unexpectedly, Arbe Robotics 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 Arbe Robotics will offset losses from the drop in Arbe Robotics' long position.
The idea behind Altair Engineering and Arbe Robotics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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