Correlation Between Titan Company and Copper

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

Diversification Opportunities for Titan Company and Copper

-0.62

Correlation Coefficient

Titan Company  Copper

Excellent diversification

The 3 months correlation between Titan and Copper is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copper 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 Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copper has no effect on the direction of Titan Company i.e., Titan Company and Copper go up and down completely randomly.

Pair Corralation between Titan Company and Copper

Assuming the 90 days trading horizon Titan Company Limited is expected to under-perform the Copper. In addition to that, Titan Company is 1.08 times more volatile than Copper. It trades about -0.05 of its total potential returns per unit of risk. Copper is currently generating about 0.25 per unit of volatility. If you would invest  409.00  in Copper on December 30, 2024 and sell it today you would earn a total of  102.00  from holding Copper or generate 24.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.92%
Values	Daily Returns

Titan Company Limited  vs.  Copper

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 very healthy basic indicators, Titan Company is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Copper

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Copper are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Copper exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Titan Company and Copper

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

The idea behind Titan Company Limited and Copper 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.