Correlation Between Titan Company and Sitowise Group

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

Diversification Opportunities for Titan Company and Sitowise Group

0.53

Correlation Coefficient

Titan Company  Sitowise Group

Very weak diversification

The 3 months correlation between Titan and Sitowise is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and Sitowise Group Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sitowise Group Oyj 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 Sitowise Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sitowise Group Oyj has no effect on the direction of Titan Company i.e., Titan Company and Sitowise Group go up and down completely randomly.

Pair Corralation between Titan Company and Sitowise Group

Assuming the 90 days trading horizon Titan Company Limited is expected to under-perform the Sitowise Group. But the stock apears to be less risky and, when comparing its historical volatility, Titan Company Limited is 2.68 times less risky than Sitowise Group. The stock trades about -0.13 of its potential returns per unit of risk. The Sitowise Group Oyj is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  245.00  in Sitowise Group Oyj on September 5, 2024 and sell it today you would earn a total of  14.00  from holding Sitowise Group Oyj or generate 5.71% return on investment over 90 days.

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

Titan Company Limited  vs.  Sitowise Group Oyj

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.

Sitowise Group Oyj

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sitowise Group Oyj are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Sitowise Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Titan Company and Sitowise Group

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

The idea behind Titan Company Limited and Sitowise Group Oyj 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.