Correlation Between Titan Company and Global Advantage

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

Diversification Opportunities for Titan Company and Global Advantage

-0.74

Correlation Coefficient

Titan Company  Global Advantage

Pay attention - limited upside

The 3 months correlation between Titan and Global is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and Global Advantage Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Advantage Por 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 Global Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Advantage Por has no effect on the direction of Titan Company i.e., Titan Company and Global Advantage go up and down completely randomly.

Pair Corralation between Titan Company and Global Advantage

Assuming the 90 days trading horizon Titan Company Limited is expected to under-perform the Global Advantage. But the stock apears to be less risky and, when comparing its historical volatility, Titan Company Limited is 1.18 times less risky than Global Advantage. The stock trades about -0.13 of its potential returns per unit of risk. The Global Advantage Portfolio is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  1,042  in Global Advantage Portfolio on September 5, 2024 and sell it today you would earn a total of  441.00  from holding Global Advantage Portfolio or generate 42.32% return on investment over 90 days.

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

Titan Company Limited  vs.  Global Advantage Portfolio

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.

Global Advantage Por

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Global Advantage Portfolio are ranked lower than 28 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Global Advantage showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Titan Company and Global Advantage

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

The idea behind Titan Company Limited and Global Advantage Portfolio 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.