Correlation Between Titan Company and Samart Digital

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

Diversification Opportunities for Titan Company and Samart Digital

-0.83

Correlation Coefficient

Titan Company  Samart Digital

Pay attention - limited upside

The 3 months correlation between Titan and Samart is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and Samart Digital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samart Digital Public 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 Samart Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samart Digital Public has no effect on the direction of Titan Company i.e., Titan Company and Samart Digital go up and down completely randomly.

Pair Corralation between Titan Company and Samart Digital

Assuming the 90 days trading horizon Titan Company Limited is expected to under-perform the Samart Digital. But the stock apears to be less risky and, when comparing its historical volatility, Titan Company Limited is 17.06 times less risky than Samart Digital. The stock trades about -0.12 of its potential returns per unit of risk. The Samart Digital Public is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Samart Digital Public on September 3, 2024 and sell it today you would earn a total of  3.00  from holding Samart Digital Public or generate 150.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Titan Company Limited  vs.  Samart Digital Public

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 weak 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.

Samart Digital Public

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Samart Digital Public are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, Samart Digital disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Titan Company and Samart Digital

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

The idea behind Titan Company Limited and Samart Digital Public 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.