Correlation Between Maanshan Iron and Titan International

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

By analyzing existing cross correlation between Maanshan Iron Steel and Titan International, you can compare the effects of market volatilities on Maanshan Iron and Titan International 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 Maanshan Iron with a short position of Titan International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maanshan Iron and Titan International.

Diversification Opportunities for Maanshan Iron and Titan International

-0.53

Correlation Coefficient

Maanshan Iron  Titan International

Excellent diversification

The 3 months correlation between Maanshan and Titan is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Maanshan Iron Steel and Titan International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan International and Maanshan Iron 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 Maanshan Iron Steel are associated (or correlated) with Titan International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan International has no effect on the direction of Maanshan Iron i.e., Maanshan Iron and Titan International go up and down completely randomly.

Pair Corralation between Maanshan Iron and Titan International

Assuming the 90 days horizon Maanshan Iron Steel is expected to generate 1.24 times more return on investment than Titan International. However, Maanshan Iron is 1.24 times more volatile than Titan International. It trades about -0.01 of its potential returns per unit of risk. Titan International is currently generating about -0.03 per unit of risk. If you would invest  13.00  in Maanshan Iron Steel on September 1, 2024 and sell it today you would lose (1.00) from holding Maanshan Iron Steel or give up 7.69% of portfolio value over 90 days.

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

Maanshan Iron Steel  vs.  Titan International

Maanshan Iron Steel

Risk-Adjusted Performance

0 of 100

Very Weak

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

Titan International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Titan International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Titan International is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Maanshan Iron and Titan International

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

The idea behind Maanshan Iron Steel and Titan International 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.