Correlation Between ULTRA CLEAN and Altair Engineering

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

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

Diversification Opportunities for ULTRA CLEAN and Altair Engineering

0.23

Correlation Coefficient

ULTRA CLEAN  Altair Engineering

Modest diversification

The 3 months correlation between ULTRA and Altair is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding ULTRA CLEAN HLDGS and Altair Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair Engineering and ULTRA CLEAN 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 ULTRA CLEAN HLDGS 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 ULTRA CLEAN i.e., ULTRA CLEAN and Altair Engineering go up and down completely randomly.

Pair Corralation between ULTRA CLEAN and Altair Engineering

Assuming the 90 days trading horizon ULTRA CLEAN HLDGS is expected to generate 1.97 times more return on investment than Altair Engineering. However, ULTRA CLEAN is 1.97 times more volatile than Altair Engineering. It trades about 0.1 of its potential returns per unit of risk. Altair Engineering is currently generating about 0.17 per unit of risk. If you would invest  3,040  in ULTRA CLEAN HLDGS on September 20, 2024 and sell it today you would earn a total of  640.00  from holding ULTRA CLEAN HLDGS or generate 21.05% return on investment over 90 days.

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

ULTRA CLEAN HLDGS  vs.  Altair Engineering

ULTRA CLEAN HLDGS

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ULTRA CLEAN HLDGS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, ULTRA CLEAN exhibited solid returns over the last few months and may actually be approaching a breakup point.

Altair Engineering

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Altair Engineering are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Altair Engineering reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ULTRA CLEAN and Altair Engineering

The main advantage of trading using opposite ULTRA CLEAN and Altair Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ULTRA CLEAN 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 ULTRA CLEAN HLDGS 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.