Correlation Between Appian Corp and Altair Engineering

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

Diversification Opportunities for Appian Corp and Altair Engineering

0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Appian and Altair is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Appian Corp Cl and Altair Engineering Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair Engineering and Appian Corp 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 Appian Corp Cl 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 Appian Corp i.e., Appian Corp and Altair Engineering go up and down completely randomly.

Pair Corralation between Appian Corp and Altair Engineering

Given the investment horizon of 90 days Appian Corp Cl is expected to generate 3.29 times more return on investment than Altair Engineering. However, Appian Corp is 3.29 times more volatile than Altair Engineering. It trades about 0.04 of its potential returns per unit of risk. Altair Engineering is currently generating about 0.02 per unit of risk. If you would invest  4,752  in Appian Corp Cl on April 6, 2022 and sell it today you would lose (38.00)  from holding Appian Corp Cl or give up 0.8% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Appian Corp Cl  vs.  Altair Engineering Inc

 Performance (%) 
      Timeline 
Appian Corp Cl 
Appian Performance
0 of 100
Over the last 90 days Appian Corp Cl has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Appian Corp is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Appian Price Channel

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 uncertain 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

Appian Corp and Altair Engineering Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Appian Corp and Altair Engineering

The main advantage of trading using opposite Appian Corp and Altair Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Appian Corp 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.
The idea behind Appian Corp Cl and Altair Engineering 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 Transaction History module to view history of all your transactions and understand their impact on performance.

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