Correlation Between Titan Machinery and LUMI GRUPPEN

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

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

Diversification Opportunities for Titan Machinery and LUMI GRUPPEN

-0.01

Correlation Coefficient

Titan Machinery  LUMI GRUPPEN

Good diversification

The 3 months correlation between Titan and LUMI is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and LUMI GRUPPEN AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LUMI GRUPPEN AS 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 LUMI GRUPPEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LUMI GRUPPEN AS has no effect on the direction of Titan Machinery i.e., Titan Machinery and LUMI GRUPPEN go up and down completely randomly.

Pair Corralation between Titan Machinery and LUMI GRUPPEN

Assuming the 90 days horizon Titan Machinery is expected to generate 4.6 times less return on investment than LUMI GRUPPEN. In addition to that, Titan Machinery is 1.18 times more volatile than LUMI GRUPPEN AS. It trades about 0.02 of its total potential returns per unit of risk. LUMI GRUPPEN AS is currently generating about 0.09 per unit of volatility. If you would invest  101.00  in LUMI GRUPPEN AS on December 19, 2024 and sell it today you would earn a total of  15.00  from holding LUMI GRUPPEN AS or generate 14.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Titan Machinery  vs.  LUMI GRUPPEN AS

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. Despite nearly stable basic indicators, Titan Machinery is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

LUMI GRUPPEN AS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LUMI GRUPPEN AS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, LUMI GRUPPEN reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Titan Machinery and LUMI GRUPPEN

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

The idea behind Titan Machinery and LUMI GRUPPEN AS 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.