Correlation Between Titan Company and Aura Biosciences

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

Diversification Opportunities for Titan Company and Aura Biosciences

0.54

Correlation Coefficient

Titan Company  Aura Biosciences

Very weak diversification

The 3 months correlation between Titan and Aura is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and Aura Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aura Biosciences 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 Aura Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aura Biosciences has no effect on the direction of Titan Company i.e., Titan Company and Aura Biosciences go up and down completely randomly.

Pair Corralation between Titan Company and Aura Biosciences

Assuming the 90 days trading horizon Titan Company Limited is expected to under-perform the Aura Biosciences. But the stock apears to be less risky and, when comparing its historical volatility, Titan Company Limited is 1.32 times less risky than Aura Biosciences. The stock trades about -0.38 of its potential returns per unit of risk. The Aura Biosciences is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  785.00  in Aura Biosciences on December 2, 2024 and sell it today you would lose (36.00) from holding Aura Biosciences or give up 4.59% of portfolio value over 90 days.

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

Titan Company Limited  vs.  Aura Biosciences

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.

Aura Biosciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aura Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Titan Company and Aura Biosciences

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

The idea behind Titan Company Limited and Aura Biosciences 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.