Correlation Between Titan Company and Private Equity

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

Diversification Opportunities for Titan Company and Private Equity

0.42

Correlation Coefficient

Titan Company  Private Equity

Very weak diversification

The 3 months correlation between Titan and Private is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and Private Equity Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Private Equity Holding 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 Private Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Private Equity Holding has no effect on the direction of Titan Company i.e., Titan Company and Private Equity go up and down completely randomly.

Pair Corralation between Titan Company and Private Equity

Assuming the 90 days trading horizon Titan Company Limited is expected to under-perform the Private Equity. But the stock apears to be less risky and, when comparing its historical volatility, Titan Company Limited is 1.16 times less risky than Private Equity. The stock trades about -0.13 of its potential returns per unit of risk. The Private Equity Holding is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  7,380  in Private Equity Holding on September 5, 2024 and sell it today you would lose (380.00) from holding Private Equity Holding or give up 5.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	88.52%
Values	Daily Returns

Titan Company Limited  vs.  Private Equity Holding

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.

Private Equity Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Private Equity Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Private Equity 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 Private Equity

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

The idea behind Titan Company Limited and Private Equity Holding 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.