Correlation Between Altair Engineering and Qantas Airways

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

Diversification Opportunities for Altair Engineering and Qantas Airways

-0.04
  Correlation Coefficient

Good diversification

The 3 months correlation between Altair and Qantas is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering Inc and Qantas Airways ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qantas Airways ADR 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 Qantas Airways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qantas Airways ADR has no effect on the direction of Altair Engineering i.e., Altair Engineering and Qantas Airways go up and down completely randomly.

Pair Corralation between Altair Engineering and Qantas Airways

Given the investment horizon of 90 days Altair Engineering is expected to under-perform the Qantas Airways. But the stock apears to be less risky and, when comparing its historical volatility, Altair Engineering is 1.15 times less risky than Qantas Airways. The stock trades about -0.04 of its potential returns per unit of risk. The Qantas Airways ADR is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,995  in Qantas Airways ADR on September 1, 2022 and sell it today you would earn a total of  105.00  from holding Qantas Airways ADR or generate 5.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Altair Engineering Inc  vs.  Qantas Airways ADR

 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 newest stock price agitation, may contribute to short-term losses for the retail investors.

Altair Price Channel

Qantas Airways ADR 
Qantas Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Qantas Airways ADR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly sluggish basic indicators, Qantas Airways showed solid returns over the last few months and may actually be approaching a breakup point.

Qantas Price Channel

Altair Engineering and Qantas Airways Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Altair Engineering and Qantas Airways

The main advantage of trading using opposite Altair Engineering and Qantas Airways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altair Engineering position performs unexpectedly, Qantas Airways 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 Qantas Airways will offset losses from the drop in Qantas Airways' long position.
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The idea behind Altair Engineering and Qantas Airways ADR 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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