Correlation Between Titan Machinery and Peel Mining

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

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

Diversification Opportunities for Titan Machinery and Peel Mining

0.37

Correlation Coefficient

Titan Machinery  Peel Mining

Weak diversification

The 3 months correlation between Titan and Peel is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and Peel Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peel Mining Limited 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 Peel Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peel Mining Limited has no effect on the direction of Titan Machinery i.e., Titan Machinery and Peel Mining go up and down completely randomly.

Pair Corralation between Titan Machinery and Peel Mining

Assuming the 90 days horizon Titan Machinery is expected to under-perform the Peel Mining. But the stock apears to be less risky and, when comparing its historical volatility, Titan Machinery is 1.85 times less risky than Peel Mining. The stock trades about -0.05 of its potential returns per unit of risk. The Peel Mining Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  5.30  in Peel Mining Limited on October 10, 2024 and sell it today you would earn a total of  1.65  from holding Peel Mining Limited or generate 31.13% return on investment over 90 days.

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

Titan Machinery  vs.  Peel Mining Limited

Titan Machinery

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Titan Machinery are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Titan Machinery may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Peel Mining Limited

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with Titan Machinery and Peel Mining

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

The idea behind Titan Machinery and Peel Mining Limited 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.