Correlation Between Titan Company and Franklin FTSE

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

Diversification Opportunities for Titan Company and Franklin FTSE

-0.52

Correlation Coefficient

Titan Company  Franklin FTSE

Excellent diversification

The 3 months correlation between Titan and Franklin is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and Franklin FTSE Taiwan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE Taiwan 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 Franklin FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin FTSE Taiwan has no effect on the direction of Titan Company i.e., Titan Company and Franklin FTSE go up and down completely randomly.

Pair Corralation between Titan Company and Franklin FTSE

Assuming the 90 days trading horizon Titan Company Limited is expected to under-perform the Franklin FTSE. But the stock apears to be less risky and, when comparing its historical volatility, Titan Company Limited is 1.04 times less risky than Franklin FTSE. The stock trades about -0.13 of its potential returns per unit of risk. The Franklin FTSE Taiwan is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4,599  in Franklin FTSE Taiwan on September 5, 2024 and sell it today you would earn a total of  247.00  from holding Franklin FTSE Taiwan or generate 5.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Titan Company Limited  vs.  Franklin FTSE Taiwan

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.

Franklin FTSE Taiwan

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin FTSE Taiwan are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Franklin FTSE 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 Franklin FTSE

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

The idea behind Titan Company Limited and Franklin FTSE Taiwan 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.