Correlation Between Titan Company and Chinese Gamer

Can any of the company-specific risk be diversified away by investing in both Titan Company and Chinese Gamer 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 Chinese Gamer 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 Chinese Gamer International, you can compare the effects of market volatilities on Titan Company and Chinese Gamer 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 Chinese Gamer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Company and Chinese Gamer.

Diversification Opportunities for Titan Company and Chinese Gamer

-0.26

Correlation Coefficient

Titan Company  Chinese Gamer

Very good diversification

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

Pair Corralation between Titan Company and Chinese Gamer

Assuming the 90 days trading horizon Titan Company Limited is expected to under-perform the Chinese Gamer. In addition to that, Titan Company is 1.17 times more volatile than Chinese Gamer International. It trades about -0.13 of its total potential returns per unit of risk. Chinese Gamer International is currently generating about 0.06 per unit of volatility. If you would invest  4,335  in Chinese Gamer International on September 5, 2024 and sell it today you would earn a total of  165.00  from holding Chinese Gamer International or generate 3.81% return on investment over 90 days.

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

Titan Company Limited  vs.  Chinese Gamer International

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.

Chinese Gamer Intern

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chinese Gamer International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Chinese Gamer is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Titan Company and Chinese Gamer

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

The idea behind Titan Company Limited and Chinese Gamer 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.