Correlation Between TITAN MACHINERY and First Quantum

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

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

Diversification Opportunities for TITAN MACHINERY and First Quantum

0.57

Correlation Coefficient

TITAN MACHINERY  First Quantum

Very weak diversification

The 3 months correlation between TITAN and First is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding TITAN MACHINERY and First Quantum Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Quantum Minerals 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 First Quantum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Quantum Minerals has no effect on the direction of TITAN MACHINERY i.e., TITAN MACHINERY and First Quantum go up and down completely randomly.

Pair Corralation between TITAN MACHINERY and First Quantum

Assuming the 90 days trading horizon TITAN MACHINERY is expected to under-perform the First Quantum. But the stock apears to be less risky and, when comparing its historical volatility, TITAN MACHINERY is 1.1 times less risky than First Quantum. The stock trades about -0.12 of its potential returns per unit of risk. The First Quantum Minerals is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,302  in First Quantum Minerals on October 5, 2024 and sell it today you would lose (52.00) from holding First Quantum Minerals or give up 3.99% of portfolio value over 90 days.

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

TITAN MACHINERY  vs.  First Quantum Minerals

TITAN MACHINERY

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days TITAN MACHINERY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather uncertain basic indicators, TITAN MACHINERY may actually be approaching a critical reversion point that can send shares even higher in February 2025.

First Quantum Minerals

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with TITAN MACHINERY and First Quantum

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

The idea behind TITAN MACHINERY and First Quantum Minerals 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 Anywhere module to track or share privately all of your investments from the convenience of any device.