Correlation Between Titan Company and Impact Coatings

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

Diversification Opportunities for Titan Company and Impact Coatings

0.46

Correlation Coefficient

Titan Company  Impact Coatings

Very weak diversification

The 3 months correlation between Titan and Impact is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and Impact Coatings publ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impact Coatings publ 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 Impact Coatings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impact Coatings publ has no effect on the direction of Titan Company i.e., Titan Company and Impact Coatings go up and down completely randomly.

Pair Corralation between Titan Company and Impact Coatings

Assuming the 90 days trading horizon Titan Company Limited is expected to generate 0.44 times more return on investment than Impact Coatings. However, Titan Company Limited is 2.28 times less risky than Impact Coatings. It trades about -0.05 of its potential returns per unit of risk. Impact Coatings publ is currently generating about -0.04 per unit of risk. If you would invest  325,735  in Titan Company Limited on December 28, 2024 and sell it today you would lose (16,970) from holding Titan Company Limited or give up 5.21% 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.  Impact Coatings publ

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 latest stock price disarray, may contribute to short-term losses for the investors.

Impact Coatings publ

Risk-Adjusted Performance

Very Weak

Over the last 90 days Impact Coatings publ 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 stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Titan Company and Impact Coatings

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

The idea behind Titan Company Limited and Impact Coatings publ 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.