Correlation Between Titan Company and Advantage Oil

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

Diversification Opportunities for Titan Company and Advantage Oil

0.59

Correlation Coefficient

Titan Company  Advantage Oil

Very weak diversification

The 3 months correlation between Titan and Advantage is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and Advantage Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantage Oil Gas 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 Advantage Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantage Oil Gas has no effect on the direction of Titan Company i.e., Titan Company and Advantage Oil go up and down completely randomly.

Pair Corralation between Titan Company and Advantage Oil

If you would invest  603.00  in Advantage Oil Gas on September 4, 2024 and sell it today you would earn a total of  0.00  from holding Advantage Oil Gas or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.61%
Values	Daily Returns

Titan Company Limited  vs.  Advantage Oil Gas

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.

Advantage Oil Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advantage Oil Gas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Advantage Oil is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Titan Company and Advantage Oil

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

The idea behind Titan Company Limited and Advantage Oil Gas 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.