Correlation Between Titan Machinery and JSC Halyk

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

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

Diversification Opportunities for Titan Machinery and JSC Halyk

0.77

Correlation Coefficient

Titan Machinery  JSC Halyk

Poor diversification

The 3 months correlation between Titan and JSC is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and JSC Halyk bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JSC Halyk bank and Titan Machinery 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 Machinery are associated (or correlated) with JSC Halyk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JSC Halyk bank has no effect on the direction of Titan Machinery i.e., Titan Machinery and JSC Halyk go up and down completely randomly.

Pair Corralation between Titan Machinery and JSC Halyk

Assuming the 90 days horizon Titan Machinery is expected to generate 1.11 times less return on investment than JSC Halyk. But when comparing it to its historical volatility, Titan Machinery is 1.27 times less risky than JSC Halyk. It trades about 0.1 of its potential returns per unit of risk. JSC Halyk bank is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,460  in JSC Halyk bank on September 5, 2024 and sell it today you would earn a total of  280.00  from holding JSC Halyk bank or generate 19.18% return on investment over 90 days.

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

Titan Machinery  vs.  JSC Halyk bank

Titan Machinery

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Titan Machinery are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Titan Machinery reported solid returns over the last few months and may actually be approaching a breakup point.

JSC Halyk bank

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JSC Halyk bank are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, JSC Halyk reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Titan Machinery and JSC Halyk

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

The idea behind Titan Machinery and JSC Halyk bank 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.