Correlation Between Titan Machinery and OBIC CoLtd

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Can any of the company-specific risk be diversified away by investing in both Titan Machinery and OBIC CoLtd 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 OBIC CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Titan Machinery and OBIC CoLtd, you can compare the effects of market volatilities on Titan Machinery and OBIC CoLtd 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 OBIC CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Machinery and OBIC CoLtd.

Diversification Opportunities for Titan Machinery and OBIC CoLtd

0.15
  Correlation Coefficient

Average diversification

The 3 months correlation between Titan and OBIC is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and OBIC CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OBIC 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 OBIC CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OBIC CoLtd has no effect on the direction of Titan Machinery i.e., Titan Machinery and OBIC CoLtd go up and down completely randomly.

Pair Corralation between Titan Machinery and OBIC CoLtd

Assuming the 90 days horizon Titan Machinery is expected to generate 2.24 times more return on investment than OBIC CoLtd. However, Titan Machinery is 2.24 times more volatile than OBIC CoLtd. It trades about 0.07 of its potential returns per unit of risk. OBIC CoLtd is currently generating about -0.03 per unit of risk. If you would invest  1,330  in Titan Machinery on October 25, 2024 and sell it today you would earn a total of  130.00  from holding Titan Machinery or generate 9.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Titan Machinery  vs.  OBIC CoLtd

 Performance 
       Timeline  
Titan Machinery 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Titan Machinery are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Titan Machinery reported solid returns over the last few months and may actually be approaching a breakup point.
OBIC CoLtd 

Risk-Adjusted Performance

0 of 100

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

Titan Machinery and OBIC CoLtd Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Titan Machinery and OBIC CoLtd

The main advantage of trading using opposite Titan Machinery and OBIC CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan Machinery position performs unexpectedly, OBIC CoLtd 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 OBIC CoLtd will offset losses from the drop in OBIC CoLtd's long position.
The idea behind Titan Machinery and OBIC 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.
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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