Correlation Between Aehr Test and Titan Machinery
Can any of the company-specific risk be diversified away by investing in both Aehr Test and Titan Machinery 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 Aehr Test and Titan Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aehr Test Systems and Titan Machinery, you can compare the effects of market volatilities on Aehr Test and Titan Machinery 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 Aehr Test with a short position of Titan Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aehr Test and Titan Machinery.
Diversification Opportunities for Aehr Test and Titan Machinery
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aehr and Titan is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Aehr Test Systems and Titan Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Machinery and Aehr Test 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 Aehr Test Systems are associated (or correlated) with Titan Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan Machinery has no effect on the direction of Aehr Test i.e., Aehr Test and Titan Machinery go up and down completely randomly.
Pair Corralation between Aehr Test and Titan Machinery
Given the investment horizon of 90 days Aehr Test is expected to generate 1.21 times less return on investment than Titan Machinery. In addition to that, Aehr Test is 1.77 times more volatile than Titan Machinery. It trades about 0.04 of its total potential returns per unit of risk. Titan Machinery is currently generating about 0.09 per unit of volatility. If you would invest 1,399 in Titan Machinery on September 4, 2024 and sell it today you would earn a total of 143.00 from holding Titan Machinery or generate 10.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aehr Test Systems vs. Titan Machinery
Performance |
| Timeline |
| Aehr Test Systems |
| Titan Machinery |
Aehr Test and Titan Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aehr Test and Titan Machinery
The main advantage of trading using opposite Aehr Test and Titan Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aehr Test position performs unexpectedly, Titan Machinery 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 Titan Machinery will offset losses from the drop in Titan Machinery's long position.| Aehr Test vs. Photronics | Aehr Test vs. Lam Research Corp | Aehr Test vs. KLA Tencor | Aehr Test vs. Kulicke and Soffa |
| Titan Machinery vs. Global Industrial Co | Titan Machinery vs. Ferguson Plc | Titan Machinery vs. MSC Industrial Direct |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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