Correlation Between Titan Company and Coastal Capital

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

Diversification Opportunities for Titan Company and Coastal Capital

0.7

Correlation Coefficient

Titan Company  Coastal Capital

Poor diversification

The 3 months correlation between Titan and Coastal is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and Coastal Capital Acq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coastal Capital Acq 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 Coastal Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coastal Capital Acq has no effect on the direction of Titan Company i.e., Titan Company and Coastal Capital go up and down completely randomly.

Pair Corralation between Titan Company and Coastal Capital

Assuming the 90 days trading horizon Titan Company Limited is expected to under-perform the Coastal Capital. But the stock apears to be less risky and, when comparing its historical volatility, Titan Company Limited is 20.3 times less risky than Coastal Capital. The stock trades about -0.13 of its potential returns per unit of risk. The Coastal Capital Acq is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.09  in Coastal Capital Acq on September 5, 2024 and sell it today you would lose (0.04) from holding Coastal Capital Acq or give up 44.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.88%
Values	Daily Returns

Titan Company Limited  vs.  Coastal Capital Acq

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.

Coastal Capital Acq

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Coastal Capital Acq are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Coastal Capital revealed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Titan Company and Coastal Capital

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

The idea behind Titan Company Limited and Coastal Capital Acq 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.