Correlation Between Altair Engineering and Global Blue

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

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

Diversification Opportunities for Altair Engineering and Global Blue

-0.42

Correlation Coefficient

Altair Engineering  Global Blue

Very good diversification

The 3 months correlation between Altair and Global is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering and Global Blue Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Blue Group 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 Global Blue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Blue Group has no effect on the direction of Altair Engineering i.e., Altair Engineering and Global Blue go up and down completely randomly.

Pair Corralation between Altair Engineering and Global Blue

Given the investment horizon of 90 days Altair Engineering is expected to under-perform the Global Blue. But the stock apears to be less risky and, when comparing its historical volatility, Altair Engineering is 1.84 times less risky than Global Blue. The stock trades about -0.11 of its potential returns per unit of risk. The Global Blue Group is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  524.00  in Global Blue Group on February 5, 2024 and sell it today you would lose (14.00) from holding Global Blue Group or give up 2.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Altair Engineering  vs.  Global Blue Group

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.

Global Blue Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global Blue Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Global Blue sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Altair Engineering and Global Blue

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

The idea behind Altair Engineering and Global Blue Group 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.