Correlation Between Titan Machinery and CHINA STATE

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

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

Diversification Opportunities for Titan Machinery and CHINA STATE

-0.26

Correlation Coefficient

Titan Machinery  CHINA STATE

Very good diversification

The 3 months correlation between Titan and CHINA is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and CHINA STATE STRU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA STATE STRU 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 CHINA STATE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA STATE STRU has no effect on the direction of Titan Machinery i.e., Titan Machinery and CHINA STATE go up and down completely randomly.

Pair Corralation between Titan Machinery and CHINA STATE

Assuming the 90 days horizon Titan Machinery is expected to under-perform the CHINA STATE. In addition to that, Titan Machinery is 1.26 times more volatile than CHINA STATE STRU. It trades about -0.04 of its total potential returns per unit of risk. CHINA STATE STRU is currently generating about 0.12 per unit of volatility. If you would invest  53.00  in CHINA STATE STRU on October 5, 2024 and sell it today you would earn a total of  82.00  from holding CHINA STATE STRU or generate 154.72% 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.  CHINA STATE STRU

Titan Machinery

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Titan Machinery has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Titan Machinery may actually be approaching a critical reversion point that can send shares even higher in February 2025.

CHINA STATE STRU

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHINA STATE STRU has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CHINA STATE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Titan Machinery and CHINA STATE

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

The idea behind Titan Machinery and CHINA STATE STRU 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.