Correlation Between Box and Altair Engineering

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

Diversification Opportunities for Box and Altair Engineering

0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Box and Altair is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Box Inc and Altair Engineering Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair Engineering and Box 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 Box Inc 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 Box i.e., Box and Altair Engineering go up and down completely randomly.

Pair Corralation between Box and Altair Engineering

Considering the 90-day investment horizon Box Inc is expected to generate 1.33 times more return on investment than Altair Engineering. However, Box is 1.33 times more volatile than Altair Engineering. It trades about 0.13 of its potential returns per unit of risk. Altair Engineering is currently generating about -0.06 per unit of risk. If you would invest  2,619  in Box Inc on July 9, 2022 and sell it today you would earn a total of  195.00  from holding Box Inc or generate 7.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Box Inc  vs.  Altair Engineering Inc

 Performance (%) 
       Timeline  
Box Inc 
Box Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Box Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Box is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Box 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 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

Box and Altair Engineering Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Box and Altair Engineering

The main advantage of trading using opposite Box and Altair Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Box 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.
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The idea behind Box Inc 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.
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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