Correlation Between Titan Company and New Economy

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

Diversification Opportunities for Titan Company and New Economy

-0.65

Correlation Coefficient

Titan Company  New Economy

Excellent diversification

The 3 months correlation between Titan and New is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and New Economy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Economy Fund 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 New Economy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Economy Fund has no effect on the direction of Titan Company i.e., Titan Company and New Economy go up and down completely randomly.

Pair Corralation between Titan Company and New Economy

Assuming the 90 days trading horizon Titan Company Limited is expected to generate 1.85 times more return on investment than New Economy. However, Titan Company is 1.85 times more volatile than New Economy Fund. It trades about 0.29 of its potential returns per unit of risk. New Economy Fund is currently generating about 0.01 per unit of risk. If you would invest  320,660  in Titan Company Limited on September 12, 2024 and sell it today you would earn a total of  26,915  from holding Titan Company Limited or generate 8.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Titan Company Limited  vs.  New Economy Fund

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.

New Economy Fund

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in New Economy Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical indicators, New Economy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Titan Company and New Economy

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

The idea behind Titan Company Limited and New Economy Fund 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..