Correlation Between TITAN MACHINERY and Carrefour

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

By analyzing existing cross correlation between TITAN MACHINERY and Carrefour SA, you can compare the effects of market volatilities on TITAN MACHINERY and Carrefour 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 Carrefour. Check out your portfolio center. Please also check ongoing floating volatility patterns of TITAN MACHINERY and Carrefour.

Diversification Opportunities for TITAN MACHINERY and Carrefour

0.14

Correlation Coefficient

TITAN MACHINERY  Carrefour

Average diversification

The 3 months correlation between TITAN and Carrefour is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding TITAN MACHINERY and Carrefour SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carrefour SA 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 Carrefour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carrefour SA has no effect on the direction of TITAN MACHINERY i.e., TITAN MACHINERY and Carrefour go up and down completely randomly.

Pair Corralation between TITAN MACHINERY and Carrefour

Assuming the 90 days trading horizon TITAN MACHINERY is expected to generate 1.87 times more return on investment than Carrefour. However, TITAN MACHINERY is 1.87 times more volatile than Carrefour SA. It trades about 0.05 of its potential returns per unit of risk. Carrefour SA is currently generating about -0.01 per unit of risk. If you would invest  1,260  in TITAN MACHINERY on December 21, 2024 and sell it today you would earn a total of  90.00  from holding TITAN MACHINERY or generate 7.14% return on investment over 90 days.

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

TITAN MACHINERY  vs.  Carrefour SA

TITAN MACHINERY

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TITAN MACHINERY are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, TITAN MACHINERY may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Carrefour SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carrefour SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Carrefour 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 Carrefour

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

The idea behind TITAN MACHINERY and Carrefour SA 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.