Correlation Between Titan Company and Junee Limited

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

Diversification Opportunities for Titan Company and Junee Limited

-0.16

Correlation Coefficient

Titan Company  Junee Limited

Good diversification

The 3 months correlation between Titan and Junee is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and Junee Limited Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Junee Limited Ordinary 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 Junee Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Junee Limited Ordinary has no effect on the direction of Titan Company i.e., Titan Company and Junee Limited go up and down completely randomly.

Pair Corralation between Titan Company and Junee Limited

Assuming the 90 days trading horizon Titan Company Limited is expected to generate 0.3 times more return on investment than Junee Limited. However, Titan Company Limited is 3.34 times less risky than Junee Limited. It trades about 0.07 of its potential returns per unit of risk. Junee Limited Ordinary is currently generating about 0.01 per unit of risk. If you would invest  238,213  in Titan Company Limited on September 7, 2024 and sell it today you would earn a total of  108,797  from holding Titan Company Limited or generate 45.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	34.83%
Values	Daily Returns

Titan Company Limited  vs.  Junee Limited Ordinary

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 very healthy basic indicators, Titan Company is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Junee Limited Ordinary

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Junee Limited Ordinary has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Pair Trading with Titan Company and Junee Limited

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

The idea behind Titan Company Limited and Junee Limited Ordinary 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.