Correlation Between Titan Company and Gold Terra

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

Diversification Opportunities for Titan Company and Gold Terra

0.38

Correlation Coefficient

Titan Company  Gold Terra

Weak diversification

The 3 months correlation between Titan and Gold is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and Gold Terra Resource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Terra Resource 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 Gold Terra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Terra Resource has no effect on the direction of Titan Company i.e., Titan Company and Gold Terra go up and down completely randomly.

Pair Corralation between Titan Company and Gold Terra

Assuming the 90 days trading horizon Titan Company Limited is expected to generate 0.19 times more return on investment than Gold Terra. However, Titan Company Limited is 5.18 times less risky than Gold Terra. It trades about -0.38 of its potential returns per unit of risk. Gold Terra Resource is currently generating about -0.1 per unit of risk. If you would invest  349,025  in Titan Company Limited on December 2, 2024 and sell it today you would lose (41,300) from holding Titan Company Limited or give up 11.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Titan Company Limited  vs.  Gold Terra Resource

Titan Limited

Risk-Adjusted Performance

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.

Gold Terra Resource

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gold Terra Resource has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Gold Terra is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Titan Company and Gold Terra

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

The idea behind Titan Company Limited and Gold Terra Resource 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.