Correlation Between Titan Company and Grid Metals

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

Diversification Opportunities for Titan Company and Grid Metals

-0.34

Correlation Coefficient

Titan Company  Grid Metals

Very good diversification

The 3 months correlation between Titan and Grid is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and Grid Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grid Metals Corp 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 Grid Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grid Metals Corp has no effect on the direction of Titan Company i.e., Titan Company and Grid Metals go up and down completely randomly.

Pair Corralation between Titan Company and Grid Metals

Assuming the 90 days trading horizon Titan Company Limited is expected to generate 0.18 times more return on investment than Grid Metals. However, Titan Company Limited is 5.61 times less risky than Grid Metals. It trades about -0.1 of its potential returns per unit of risk. Grid Metals Corp is currently generating about -0.03 per unit of risk. If you would invest  360,770  in Titan Company Limited on September 4, 2024 and sell it today you would lose (30,085) from holding Titan Company Limited or give up 8.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.38%
Values	Daily Returns

Titan Company Limited  vs.  Grid Metals Corp

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.

Grid Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grid Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Titan Company and Grid Metals

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

The idea behind Titan Company Limited and Grid Metals Corp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.