Correlation Between Altair Engineering and Element 29

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Can any of the company-specific risk be diversified away by investing in both Altair Engineering and Element 29 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 Element 29 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altair Engineering and Element 29 Resources, you can compare the effects of market volatilities on Altair Engineering and Element 29 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 Element 29. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altair Engineering and Element 29.

Diversification Opportunities for Altair Engineering and Element 29

-0.01
  Correlation Coefficient

Good diversification

The 3 months correlation between Altair and Element is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering and Element 29 Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Element 29 Resources 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 Element 29. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Element 29 Resources has no effect on the direction of Altair Engineering i.e., Altair Engineering and Element 29 go up and down completely randomly.

Pair Corralation between Altair Engineering and Element 29

Given the investment horizon of 90 days Altair Engineering is expected to generate 0.72 times more return on investment than Element 29. However, Altair Engineering is 1.39 times less risky than Element 29. It trades about -0.06 of its potential returns per unit of risk. Element 29 Resources is currently generating about -0.1 per unit of risk. If you would invest  7,346  in Altair Engineering on September 9, 2022 and sell it today you would lose (2,550)  from holding Altair Engineering or give up 34.71% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Altair Engineering  vs.  Element 29 Resources

 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 relatively invariable basic indicators, Altair Engineering is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Altair Price Channel

Element 29 Resources 
Element Performance
0 of 100
Over the last 90 days Element 29 Resources 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 basic indicators remain rather sound which may send shares a bit higher in January 2023. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Element Price Channel

Altair Engineering and Element 29 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Altair Engineering and Element 29

The main advantage of trading using opposite Altair Engineering and Element 29 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altair Engineering position performs unexpectedly, Element 29 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 Element 29 will offset losses from the drop in Element 29's long position.
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The idea behind Altair Engineering and Element 29 Resources 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.
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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 Commodity Channel Index module to use Commodity Channel Index to analyze current equity momentum.

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