Correlation Between Titan Cement and NV Bekaert

Can any of the company-specific risk be diversified away by investing in both Titan Cement and NV Bekaert 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 Cement and NV Bekaert into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Titan Cement International and NV Bekaert SA, you can compare the effects of market volatilities on Titan Cement and NV Bekaert 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 Cement with a short position of NV Bekaert. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Cement and NV Bekaert.

Diversification Opportunities for Titan Cement and NV Bekaert

0.28

Correlation Coefficient

Titan Cement  NV Bekaert

Modest diversification

The 3 months correlation between Titan and BEKB is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Titan Cement International and NV Bekaert SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NV Bekaert SA and Titan Cement 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 Cement International are associated (or correlated) with NV Bekaert. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NV Bekaert SA has no effect on the direction of Titan Cement i.e., Titan Cement and NV Bekaert go up and down completely randomly.

Pair Corralation between Titan Cement and NV Bekaert

Assuming the 90 days trading horizon Titan Cement is expected to generate 3.31 times less return on investment than NV Bekaert. In addition to that, Titan Cement is 1.32 times more volatile than NV Bekaert SA. It trades about 0.02 of its total potential returns per unit of risk. NV Bekaert SA is currently generating about 0.08 per unit of volatility. If you would invest  3,270  in NV Bekaert SA on December 2, 2024 and sell it today you would earn a total of  192.00  from holding NV Bekaert SA or generate 5.87% return on investment over 90 days.

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

Titan Cement International  vs.  NV Bekaert SA

Titan Cement Interna

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Titan Cement International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Titan Cement is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

NV Bekaert SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NV Bekaert SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, NV Bekaert is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Titan Cement and NV Bekaert

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

The idea behind Titan Cement International and NV Bekaert SA 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.