Correlation Between Procter Gamble and Altair Engineering

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

Diversification Opportunities for Procter Gamble and Altair Engineering

0.49
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Procter and Altair is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Altair Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair Engineering and Procter Gamble 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 Procter Gamble 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 Procter Gamble i.e., Procter Gamble and Altair Engineering go up and down completely randomly.

Pair Corralation between Procter Gamble and Altair Engineering

Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.38 times more return on investment than Altair Engineering. However, Procter Gamble is 2.65 times less risky than Altair Engineering. It trades about 0.42 of its potential returns per unit of risk. Altair Engineering is currently generating about 0.05 per unit of risk. If you would invest  13,650  in Procter Gamble on September 8, 2022 and sell it today you would earn a total of  1,351  from holding Procter Gamble or generate 9.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Procter Gamble  vs.  Altair Engineering

 Performance (%) 
       Timeline  
Procter Gamble 
Procter Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Procter Gamble are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Procter Gamble may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Procter 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

Procter Gamble and Altair Engineering Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Procter Gamble and Altair Engineering

The main advantage of trading using opposite Procter Gamble and Altair Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble 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 Procter Gamble 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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