Correlation Between BHCCN and Titan Machinery

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

By analyzing existing cross correlation between BHCCN 11 30 SEP 28 and Titan Machinery, you can compare the effects of market volatilities on BHCCN and Titan Machinery 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 BHCCN with a short position of Titan Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHCCN and Titan Machinery.

Diversification Opportunities for BHCCN and Titan Machinery

-0.07

Correlation Coefficient

BHCCN  Titan Machinery

Good diversification

The 3 months correlation between BHCCN and Titan is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding BHCCN 11 30 SEP 28 and Titan Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Machinery and BHCCN 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 BHCCN 11 30 SEP 28 are associated (or correlated) with Titan Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan Machinery has no effect on the direction of BHCCN i.e., BHCCN and Titan Machinery go up and down completely randomly.

Pair Corralation between BHCCN and Titan Machinery

Assuming the 90 days trading horizon BHCCN 11 30 SEP 28 is expected to generate 0.72 times more return on investment than Titan Machinery. However, BHCCN 11 30 SEP 28 is 1.38 times less risky than Titan Machinery. It trades about 0.02 of its potential returns per unit of risk. Titan Machinery is currently generating about -0.06 per unit of risk. If you would invest  7,203  in BHCCN 11 30 SEP 28 on October 26, 2024 and sell it today you would earn a total of  297.00  from holding BHCCN 11 30 SEP 28 or generate 4.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.63%
Values	Daily Returns

BHCCN 11 30 SEP 28  vs.  Titan Machinery

BHCCN 11 30

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BHCCN 11 30 SEP 28 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for BHCCN 11 30 SEP 28 investors.

Titan Machinery

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Titan Machinery are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Titan Machinery may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BHCCN and Titan Machinery

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

The idea behind BHCCN 11 30 SEP 28 and Titan Machinery 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.