Correlation Between Titan Machinery and SHIP HEALTHCARE

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

By analyzing existing cross correlation between Titan Machinery and SHIP HEALTHCARE HLDGINC, you can compare the effects of market volatilities on Titan Machinery and SHIP HEALTHCARE 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 SHIP HEALTHCARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Machinery and SHIP HEALTHCARE.

Diversification Opportunities for Titan Machinery and SHIP HEALTHCARE

-0.21

Correlation Coefficient

Titan Machinery  SHIP HEALTHCARE

Very good diversification

The 3 months correlation between Titan and SHIP is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and SHIP HEALTHCARE HLDGINC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHIP HEALTHCARE HLDGINC 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 SHIP HEALTHCARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHIP HEALTHCARE HLDGINC has no effect on the direction of Titan Machinery i.e., Titan Machinery and SHIP HEALTHCARE go up and down completely randomly.

Pair Corralation between Titan Machinery and SHIP HEALTHCARE

Assuming the 90 days horizon Titan Machinery is expected to generate 2.94 times more return on investment than SHIP HEALTHCARE. However, Titan Machinery is 2.94 times more volatile than SHIP HEALTHCARE HLDGINC. It trades about 0.11 of its potential returns per unit of risk. SHIP HEALTHCARE HLDGINC is currently generating about -0.06 per unit of risk. If you would invest  1,310  in Titan Machinery on December 28, 2024 and sell it today you would earn a total of  340.00  from holding Titan Machinery or generate 25.95% return on investment over 90 days.

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

Titan Machinery  vs.  SHIP HEALTHCARE HLDGINC

Titan Machinery

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Titan Machinery are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Titan Machinery reported solid returns over the last few months and may actually be approaching a breakup point.

SHIP HEALTHCARE HLDGINC

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Titan Machinery and SHIP HEALTHCARE

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

The idea behind Titan Machinery and SHIP HEALTHCARE HLDGINC 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.