Correlation Between Titan International and CEA Industries

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

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

Diversification Opportunities for Titan International and CEA Industries

0.35

Correlation Coefficient

Titan International  CEA Industries

Weak diversification

The 3 months correlation between Titan and CEA is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Titan International and CEA Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEA Industries and Titan International 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 International are associated (or correlated) with CEA Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEA Industries has no effect on the direction of Titan International i.e., Titan International and CEA Industries go up and down completely randomly.

Pair Corralation between Titan International and CEA Industries

Considering the 90-day investment horizon Titan International is expected to generate 0.55 times more return on investment than CEA Industries. However, Titan International is 1.83 times less risky than CEA Industries. It trades about 0.14 of its potential returns per unit of risk. CEA Industries is currently generating about 0.03 per unit of risk. If you would invest  697.00  in Titan International on December 26, 2024 and sell it today you would earn a total of  206.00  from holding Titan International or generate 29.56% return on investment over 90 days.

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

Titan International  vs.  CEA Industries

Titan International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Titan International are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Titan International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

CEA Industries

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CEA Industries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, CEA Industries may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Titan International and CEA Industries

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

The idea behind Titan International and CEA Industries 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.