Correlation Between Precision Drilling and Titan International

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

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

Diversification Opportunities for Precision Drilling and Titan International

-0.54

Correlation Coefficient

Precision Drilling  Titan International

Excellent diversification

The 3 months correlation between Precision and Titan is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Precision Drilling and Titan International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan International and Precision Drilling 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 Precision Drilling 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 Precision Drilling i.e., Precision Drilling and Titan International go up and down completely randomly.

Pair Corralation between Precision Drilling and Titan International

Considering the 90-day investment horizon Precision Drilling is expected to under-perform the Titan International. But the stock apears to be less risky and, when comparing its historical volatility, Precision Drilling is 1.53 times less risky than Titan International. The stock trades about -0.17 of its potential returns per unit of risk. The Titan International is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  669.00  in Titan International on December 29, 2024 and sell it today you would earn a total of  227.00  from holding Titan International or generate 33.93% return on investment over 90 days.

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

Precision Drilling  vs.  Titan International

Precision Drilling

Risk-Adjusted Performance

Very Weak

Over the last 90 days Precision Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Titan International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Titan International are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Titan International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Precision Drilling and Titan International

The main advantage of trading using opposite Precision Drilling and Titan International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precision Drilling 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 Precision Drilling 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.

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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.