Correlation Between Titan Company and Ivanhoe Mines

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

Diversification Opportunities for Titan Company and Ivanhoe Mines

-0.03

Correlation Coefficient

Titan Company  Ivanhoe Mines

Good diversification

The 3 months correlation between Titan and Ivanhoe is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and Ivanhoe Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivanhoe Mines 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 Ivanhoe Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivanhoe Mines has no effect on the direction of Titan Company i.e., Titan Company and Ivanhoe Mines go up and down completely randomly.

Pair Corralation between Titan Company and Ivanhoe Mines

Assuming the 90 days trading horizon Titan Company Limited is expected to under-perform the Ivanhoe Mines. But the stock apears to be less risky and, when comparing its historical volatility, Titan Company Limited is 2.07 times less risky than Ivanhoe Mines. The stock trades about -0.1 of its potential returns per unit of risk. The Ivanhoe Mines is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,626  in Ivanhoe Mines on September 4, 2024 and sell it today you would earn a total of  245.00  from holding Ivanhoe Mines or generate 15.07% return on investment over 90 days.

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

Titan Company Limited  vs.  Ivanhoe Mines

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.

Ivanhoe Mines

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ivanhoe Mines are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Ivanhoe Mines displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Titan Company and Ivanhoe Mines

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

The idea behind Titan Company Limited and Ivanhoe Mines 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.