Correlation Between Titan Company and StateHouse Holdings

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

Diversification Opportunities for Titan Company and StateHouse Holdings

0.46

Correlation Coefficient

Titan Company  StateHouse Holdings

Very weak diversification

The 3 months correlation between Titan and StateHouse is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and StateHouse Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StateHouse Holdings 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 StateHouse Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StateHouse Holdings has no effect on the direction of Titan Company i.e., Titan Company and StateHouse Holdings go up and down completely randomly.

Pair Corralation between Titan Company and StateHouse Holdings

Assuming the 90 days trading horizon Titan Company Limited is expected to under-perform the StateHouse Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Titan Company Limited is 8.25 times less risky than StateHouse Holdings. The stock trades about -0.1 of its potential returns per unit of risk. The StateHouse Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2.00  in StateHouse Holdings on September 4, 2024 and sell it today you would lose (0.50) from holding StateHouse Holdings or give up 25.0% of portfolio value over 90 days.

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

Titan Company Limited  vs.  StateHouse Holdings

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.

StateHouse Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in StateHouse Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, StateHouse Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Titan Company and StateHouse Holdings

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

The idea behind Titan Company Limited and StateHouse Holdings 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .