Correlation Between Titan Company and Sichuan Fulin

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

Diversification Opportunities for Titan Company and Sichuan Fulin

-0.88

Correlation Coefficient

Titan Company  Sichuan Fulin

Pay attention - limited upside

The 3 months correlation between Titan and Sichuan is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and Sichuan Fulin Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sichuan Fulin Transp 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 Sichuan Fulin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sichuan Fulin Transp has no effect on the direction of Titan Company i.e., Titan Company and Sichuan Fulin go up and down completely randomly.

Pair Corralation between Titan Company and Sichuan Fulin

Assuming the 90 days trading horizon Titan Company Limited is expected to under-perform the Sichuan Fulin. But the stock apears to be less risky and, when comparing its historical volatility, Titan Company Limited is 2.03 times less risky than Sichuan Fulin. The stock trades about -0.12 of its potential returns per unit of risk. The Sichuan Fulin Transportation is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  520.00  in Sichuan Fulin Transportation on September 3, 2024 and sell it today you would earn a total of  183.00  from holding Sichuan Fulin Transportation or generate 35.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	93.55%
Values	Daily Returns

Titan Company Limited  vs.  Sichuan Fulin Transportation

Titan Limited

Risk-Adjusted Performance

0 of 100

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.

Sichuan Fulin Transp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sichuan Fulin Transportation are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sichuan Fulin sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Titan Company and Sichuan Fulin

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

The idea behind Titan Company Limited and Sichuan Fulin Transportation 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.