Correlation Between MCBC Holdings and Altair Engineering

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

By analyzing existing cross correlation between MCBC Holdings and Altair Engineering, you can compare the effects of market volatilities on MCBC Holdings 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 MCBC Holdings with a short position of Altair Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCBC Holdings and Altair Engineering.

Diversification Opportunities for MCBC Holdings and Altair Engineering

0.04

Correlation Coefficient

MCBC Holdings  Altair Engineering

Significant diversification

The 3 months correlation between MCBC and Altair is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding MCBC Holdings and Altair Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair Engineering and MCBC Holdings 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 MCBC Holdings 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 MCBC Holdings i.e., MCBC Holdings and Altair Engineering go up and down completely randomly.

Pair Corralation between MCBC Holdings and Altair Engineering

Given the investment horizon of 90 days MCBC Holdings is expected to under-perform the Altair Engineering. In addition to that, MCBC Holdings is 1.61 times more volatile than Altair Engineering. It trades about -0.05 of its total potential returns per unit of risk. Altair Engineering is currently generating about -0.06 per unit of volatility. 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

MCBC Holdings  vs.  Altair Engineering

MCBC Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MCBC Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, MCBC Holdings is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

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.

Pair Trading with MCBC Holdings and Altair Engineering

The main advantage of trading using opposite MCBC Holdings and Altair Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MCBC Holdings 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 MCBC Holdings 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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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.