Correlation Between TITAN MACHINERY and China Railway

Can any of the company-specific risk be diversified away by investing in both TITAN MACHINERY and China Railway 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 TITAN MACHINERY and China Railway into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TITAN MACHINERY and China Railway Construction, you can compare the effects of market volatilities on TITAN MACHINERY and China Railway 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 TITAN MACHINERY with a short position of China Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of TITAN MACHINERY and China Railway.

Diversification Opportunities for TITAN MACHINERY and China Railway

0.0

Correlation Coefficient

TITAN MACHINERY  China Railway

Pay attention - limited upside

The 3 months correlation between TITAN and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding TITAN MACHINERY and China Railway Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Railway Constr and TITAN MACHINERY 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 TITAN MACHINERY are associated (or correlated) with China Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Railway Constr has no effect on the direction of TITAN MACHINERY i.e., TITAN MACHINERY and China Railway go up and down completely randomly.

Pair Corralation between TITAN MACHINERY and China Railway

If you would invest  1,270  in TITAN MACHINERY on December 20, 2024 and sell it today you would lose (10.00) from holding TITAN MACHINERY or give up 0.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

TITAN MACHINERY  vs.  China Railway Construction

TITAN MACHINERY

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TITAN MACHINERY are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, TITAN MACHINERY is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

China Railway Constr

Risk-Adjusted Performance

Very Weak

Over the last 90 days China Railway Construction has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, China Railway is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with TITAN MACHINERY and China Railway

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

The idea behind TITAN MACHINERY and China Railway Construction 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.

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 the Global Correlations module to find global opportunities by holding instruments from different markets.