Correlation Between Titan Company and GENERAL

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

Diversification Opportunities for Titan Company and GENERAL

-0.45

Correlation Coefficient

Titan Company  GENERAL

Very good diversification

The 3 months correlation between Titan and GENERAL is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and GENERAL ELEC CAP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GENERAL ELEC CAP 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 GENERAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GENERAL ELEC CAP has no effect on the direction of Titan Company i.e., Titan Company and GENERAL go up and down completely randomly.

Pair Corralation between Titan Company and GENERAL

Assuming the 90 days trading horizon Titan Company Limited is expected to generate 0.34 times more return on investment than GENERAL. However, Titan Company Limited is 2.96 times less risky than GENERAL. It trades about 0.12 of its potential returns per unit of risk. GENERAL ELEC CAP is currently generating about -0.17 per unit of risk. If you would invest  322,200  in Titan Company Limited on September 5, 2024 and sell it today you would earn a total of  11,075  from holding Titan Company Limited or generate 3.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	42.86%
Values	Daily Returns

Titan Company Limited  vs.  GENERAL ELEC CAP

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.

GENERAL ELEC CAP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GENERAL ELEC CAP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for GENERAL ELEC CAP investors.

Pair Trading with Titan Company and GENERAL

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

The idea behind Titan Company Limited and GENERAL ELEC CAP 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.