Correlation Between SIL Investments and Titan Company

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

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

Diversification Opportunities for SIL Investments and Titan Company

-0.41

Correlation Coefficient

SIL Investments  Titan Company

Very good diversification

The 3 months correlation between SIL and Titan is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding SIL Investments Limited and Titan Company Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Limited and SIL Investments 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 SIL Investments Limited are associated (or correlated) with Titan Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan Limited has no effect on the direction of SIL Investments i.e., SIL Investments and Titan Company go up and down completely randomly.

Pair Corralation between SIL Investments and Titan Company

Assuming the 90 days trading horizon SIL Investments Limited is expected to generate 2.2 times more return on investment than Titan Company. However, SIL Investments is 2.2 times more volatile than Titan Company Limited. It trades about 0.06 of its potential returns per unit of risk. Titan Company Limited is currently generating about 0.07 per unit of risk. If you would invest  33,239  in SIL Investments Limited on October 9, 2024 and sell it today you would earn a total of  32,246  from holding SIL Investments Limited or generate 97.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.38%
Values	Daily Returns

SIL Investments Limited  vs.  Titan Company Limited

SIL Investments

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SIL Investments Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain forward indicators, SIL Investments sustained solid returns over the last few months and may actually be approaching a breakup point.

Titan Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Titan Company Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Titan Company is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with SIL Investments and Titan Company

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

The idea behind SIL Investments Limited and Titan Company 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.