Correlation Between Titan Machinery and Casio Computer

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

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

Diversification Opportunities for Titan Machinery and Casio Computer

0.06

Correlation Coefficient

Titan Machinery  Casio Computer

Significant diversification

The 3 months correlation between Titan and Casio is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and Casio Computer CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Casio Computer CoLtd 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 Casio Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Casio Computer CoLtd has no effect on the direction of Titan Machinery i.e., Titan Machinery and Casio Computer go up and down completely randomly.

Pair Corralation between Titan Machinery and Casio Computer

Assuming the 90 days horizon Titan Machinery is expected to generate 1.26 times less return on investment than Casio Computer. In addition to that, Titan Machinery is 1.98 times more volatile than Casio Computer CoLtd. It trades about 0.04 of its total potential returns per unit of risk. Casio Computer CoLtd is currently generating about 0.09 per unit of volatility. If you would invest  733.00  in Casio Computer CoLtd on October 5, 2024 and sell it today you would earn a total of  58.00  from holding Casio Computer CoLtd or generate 7.91% return on investment over 90 days.

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

Titan Machinery  vs.  Casio Computer CoLtd

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.

Casio Computer CoLtd

Risk-Adjusted Performance

0 of 100

OK

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

Pair Trading with Titan Machinery and Casio Computer

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

The idea behind Titan Machinery and Casio Computer CoLtd 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.