Correlation Between Titan Company and Catalyst Enhanced

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

Diversification Opportunities for Titan Company and Catalyst Enhanced

0.23

Correlation Coefficient

Titan Company  Catalyst Enhanced

Modest diversification

The 3 months correlation between Titan and Catalyst is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and Catalyst Enhanced Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Enhanced Income 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 Catalyst Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Enhanced Income has no effect on the direction of Titan Company i.e., Titan Company and Catalyst Enhanced go up and down completely randomly.

Pair Corralation between Titan Company and Catalyst Enhanced

Assuming the 90 days trading horizon Titan Company Limited is expected to under-perform the Catalyst Enhanced. In addition to that, Titan Company is 4.59 times more volatile than Catalyst Enhanced Income. It trades about -0.07 of its total potential returns per unit of risk. Catalyst Enhanced Income is currently generating about -0.04 per unit of volatility. If you would invest  804.00  in Catalyst Enhanced Income on December 2, 2024 and sell it today you would lose (6.00) from holding Catalyst Enhanced Income or give up 0.75% 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.  Catalyst Enhanced Income

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.

Catalyst Enhanced Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Catalyst Enhanced Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Catalyst Enhanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Titan Company and Catalyst Enhanced

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

The idea behind Titan Company Limited and Catalyst Enhanced Income 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.