Correlation Between Titan Company and Aberdeen International

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

Diversification Opportunities for Titan Company and Aberdeen International

0.2

Correlation Coefficient

Titan Company  Aberdeen International

Modest diversification

The 3 months correlation between Titan and Aberdeen is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and Aberdeen International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen International 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 Aberdeen International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen International has no effect on the direction of Titan Company i.e., Titan Company and Aberdeen International go up and down completely randomly.

Pair Corralation between Titan Company and Aberdeen International

If you would invest  4.00  in Aberdeen International on December 2, 2024 and sell it today you would lose (2.00) from holding Aberdeen International or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

Titan Company Limited  vs.  Aberdeen International

Titan Limited

Risk-Adjusted Performance

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 weak 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.

Aberdeen International

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Titan Company and Aberdeen International

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

The idea behind Titan Company Limited and Aberdeen 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..