Correlation Between Titan Company and Grand Pacific

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

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

Diversification Opportunities for Titan Company and Grand Pacific

0.26

Correlation Coefficient

Titan Company  Grand Pacific

Modest diversification

The 3 months correlation between Titan and Grand is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and Grand Pacific Petrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Pacific Petroc and Titan Company 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 Company Limited are associated (or correlated) with Grand Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Pacific Petroc has no effect on the direction of Titan Company i.e., Titan Company and Grand Pacific go up and down completely randomly.

Pair Corralation between Titan Company and Grand Pacific

Assuming the 90 days trading horizon Titan Company Limited is expected to under-perform the Grand Pacific. In addition to that, Titan Company is 1.39 times more volatile than Grand Pacific Petrochemical. It trades about -0.13 of its total potential returns per unit of risk. Grand Pacific Petrochemical is currently generating about 0.02 per unit of volatility. If you would invest  2,315  in Grand Pacific Petrochemical on September 5, 2024 and sell it today you would earn a total of  25.00  from holding Grand Pacific Petrochemical or generate 1.08% return on investment over 90 days.

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

Titan Company Limited  vs.  Grand Pacific Petrochemical

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 latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Grand Pacific Petroc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grand Pacific Petrochemical are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Grand Pacific is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Titan Company and Grand Pacific

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

The idea behind Titan Company Limited and Grand Pacific Petrochemical 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.