Correlation Between Titan Company and Amtran Technology

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

Diversification Opportunities for Titan Company and Amtran Technology

0.44

Correlation Coefficient

Titan Company  Amtran Technology

Very weak diversification

The 3 months correlation between Titan and Amtran is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and Amtran Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amtran Technology 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 Amtran Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amtran Technology has no effect on the direction of Titan Company i.e., Titan Company and Amtran Technology go up and down completely randomly.

Pair Corralation between Titan Company and Amtran Technology

Assuming the 90 days trading horizon Titan Company Limited is expected to under-perform the Amtran Technology. But the stock apears to be less risky and, when comparing its historical volatility, Titan Company Limited is 1.63 times less risky than Amtran Technology. The stock trades about -0.09 of its potential returns per unit of risk. The Amtran Technology Co is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  2,040  in Amtran Technology Co on September 12, 2024 and sell it today you would lose (130.00) from holding Amtran Technology Co or give up 6.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Titan Company Limited  vs.  Amtran Technology Co

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.

Amtran Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amtran Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Amtran Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Titan Company and Amtran Technology

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

The idea behind Titan Company Limited and Amtran Technology Co 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.