Correlation Between Altair Engineering and Consensus Cloud

Can any of the company-specific risk be diversified away by investing in both Altair Engineering and Consensus Cloud 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 Consensus Cloud into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Altair Engineering and Consensus Cloud Solutions, you can compare the effects of market volatilities on Altair Engineering and Consensus Cloud 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 Consensus Cloud. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altair Engineering and Consensus Cloud.

Diversification Opportunities for Altair Engineering and Consensus Cloud

0.75

Correlation Coefficient

Altair Engineering  Consensus Cloud

Poor diversification

The 3 months correlation between Altair and Consensus is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering and Consensus Cloud Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consensus Cloud Solutions 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 Consensus Cloud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consensus Cloud Solutions has no effect on the direction of Altair Engineering i.e., Altair Engineering and Consensus Cloud go up and down completely randomly.

Pair Corralation between Altair Engineering and Consensus Cloud

Given the investment horizon of 90 days Altair Engineering is expected to generate 0.33 times more return on investment than Consensus Cloud. However, Altair Engineering is 3.06 times less risky than Consensus Cloud. It trades about -0.06 of its potential returns per unit of risk. Consensus Cloud Solutions is currently generating about -0.1 per unit of risk. If you would invest  8,513  in Altair Engineering on January 26, 2024 and sell it today you would lose (168.00) from holding Altair Engineering or give up 1.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Altair Engineering  vs.  Consensus Cloud Solutions

Altair Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

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

Consensus Cloud Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Consensus Cloud Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Altair Engineering and Consensus Cloud

The main advantage of trading using opposite Altair Engineering and Consensus Cloud positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altair Engineering position performs unexpectedly, Consensus Cloud 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 Consensus Cloud will offset losses from the drop in Consensus Cloud's long position.

The idea behind Altair Engineering and Consensus Cloud Solutions 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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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 the Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.