Correlation Between TITAN MACHINERY and Karoon Energy
Can any of the company-specific risk be diversified away by investing in both TITAN MACHINERY and Karoon Energy 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 MACHINERY and Karoon Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TITAN MACHINERY and Karoon Energy, you can compare the effects of market volatilities on TITAN MACHINERY and Karoon Energy 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 MACHINERY with a short position of Karoon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of TITAN MACHINERY and Karoon Energy.
Diversification Opportunities for TITAN MACHINERY and Karoon Energy
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between TITAN and Karoon is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding TITAN MACHINERY and Karoon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karoon Energy and TITAN MACHINERY 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 MACHINERY are associated (or correlated) with Karoon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karoon Energy has no effect on the direction of TITAN MACHINERY i.e., TITAN MACHINERY and Karoon Energy go up and down completely randomly.
Pair Corralation between TITAN MACHINERY and Karoon Energy
Assuming the 90 days trading horizon TITAN MACHINERY is expected to generate 0.92 times more return on investment than Karoon Energy. However, TITAN MACHINERY is 1.09 times less risky than Karoon Energy. It trades about 0.16 of its potential returns per unit of risk. Karoon Energy is currently generating about 0.03 per unit of risk. If you would invest 1,340 in TITAN MACHINERY on September 15, 2024 and sell it today you would earn a total of 100.00 from holding TITAN MACHINERY or generate 7.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TITAN MACHINERY vs. Karoon Energy
Performance |
| Timeline |
| TITAN MACHINERY |
| Karoon Energy |
TITAN MACHINERY and Karoon Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TITAN MACHINERY and Karoon Energy
The main advantage of trading using opposite TITAN MACHINERY and Karoon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TITAN MACHINERY position performs unexpectedly, Karoon Energy 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 Karoon Energy will offset losses from the drop in Karoon Energy's long position.| TITAN MACHINERY vs. Taiwan Semiconductor Manufacturing | TITAN MACHINERY vs. VITEC SOFTWARE GROUP | TITAN MACHINERY vs. NTG Nordic Transport | TITAN MACHINERY vs. TOREX SEMICONDUCTOR LTD |
| Karoon Energy vs. Hitachi Construction Machinery | Karoon Energy vs. Clean Energy Fuels | Karoon Energy vs. TITAN MACHINERY | Karoon Energy vs. Daito Trust Construction |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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