Correlation Between TITAN MACHINERY and Samsung Electronics

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

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

Diversification Opportunities for TITAN MACHINERY and Samsung Electronics

-0.78

Correlation Coefficient

TITAN MACHINERY  Samsung Electronics

Pay attention - limited upside

The 3 months correlation between TITAN and Samsung is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding TITAN MACHINERY and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics 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 Samsung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Electronics has no effect on the direction of TITAN MACHINERY i.e., TITAN MACHINERY and Samsung Electronics go up and down completely randomly.

Pair Corralation between TITAN MACHINERY and Samsung Electronics

Assuming the 90 days trading horizon TITAN MACHINERY is expected to generate 1.16 times more return on investment than Samsung Electronics. However, TITAN MACHINERY is 1.16 times more volatile than Samsung Electronics Co. It trades about 0.12 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.06 per unit of risk. If you would invest  1,370  in TITAN MACHINERY on September 17, 2024 and sell it today you would earn a total of  70.00  from holding TITAN MACHINERY or generate 5.11% return on investment over 90 days.

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

TITAN MACHINERY  vs.  Samsung Electronics Co

TITAN MACHINERY

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TITAN MACHINERY are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, TITAN MACHINERY exhibited solid returns over the last few months and may actually be approaching a breakup point.

Samsung Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samsung Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with TITAN MACHINERY and Samsung Electronics

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

The idea behind TITAN MACHINERY and Samsung Electronics Co 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 Global Correlations module to find global opportunities by holding instruments from different markets.