Correlation Between Titan Company and Posco ICT

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

Diversification Opportunities for Titan Company and Posco ICT

0.7

Correlation Coefficient

Titan Company  Posco ICT

Poor diversification

The 3 months correlation between Titan and Posco is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and Posco ICT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Posco ICT 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 Posco ICT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Posco ICT has no effect on the direction of Titan Company i.e., Titan Company and Posco ICT go up and down completely randomly.

Pair Corralation between Titan Company and Posco ICT

Assuming the 90 days trading horizon Titan Company is expected to generate 5.68 times less return on investment than Posco ICT. But when comparing it to its historical volatility, Titan Company Limited is 3.75 times less risky than Posco ICT. It trades about 0.05 of its potential returns per unit of risk. Posco ICT is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  667,805  in Posco ICT on September 4, 2024 and sell it today you would earn a total of  1,442,195  from holding Posco ICT or generate 215.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.98%
Values	Daily Returns

Titan Company Limited  vs.  Posco ICT

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 uncertain 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.

Posco ICT

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Titan Company and Posco ICT

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

The idea behind Titan Company Limited and Posco ICT 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.