Correlation Between Leading Edge and Titanium Transportation

Can any of the company-specific risk be diversified away by investing in both Leading Edge and Titanium Transportation 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 Leading Edge and Titanium Transportation into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Leading Edge Materials and Titanium Transportation Group, you can compare the effects of market volatilities on Leading Edge and Titanium Transportation 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 Leading Edge with a short position of Titanium Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leading Edge and Titanium Transportation.

Diversification Opportunities for Leading Edge and Titanium Transportation

-0.8

Correlation Coefficient

Leading Edge  Titanium Transportation

Pay attention - limited upside

The 3 months correlation between Leading and Titanium is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Leading Edge Materials and Titanium Transportation Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titanium Transportation and Leading Edge 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 Leading Edge Materials are associated (or correlated) with Titanium Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titanium Transportation has no effect on the direction of Leading Edge i.e., Leading Edge and Titanium Transportation go up and down completely randomly.

Pair Corralation between Leading Edge and Titanium Transportation

Assuming the 90 days horizon Leading Edge Materials is expected to generate 4.71 times more return on investment than Titanium Transportation. However, Leading Edge is 4.71 times more volatile than Titanium Transportation Group. It trades about 0.17 of its potential returns per unit of risk. Titanium Transportation Group is currently generating about -0.34 per unit of risk. If you would invest  9.50  in Leading Edge Materials on December 12, 2024 and sell it today you would earn a total of  12.50  from holding Leading Edge Materials or generate 131.58% return on investment over 90 days.

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

Leading Edge Materials  vs.  Titanium Transportation Group

Leading Edge Materials

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Leading Edge Materials are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Leading Edge showed solid returns over the last few months and may actually be approaching a breakup point.

Titanium Transportation

Risk-Adjusted Performance

Very Weak

Over the last 90 days Titanium Transportation Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Leading Edge and Titanium Transportation

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

The idea behind Leading Edge Materials and Titanium Transportation Group 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.