Correlation Between China Resources and Titan Machinery
Can any of the company-specific risk be diversified away by investing in both China Resources 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 China Resources and Titan Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Resources Beer and Titan Machinery, you can compare the effects of market volatilities on China Resources 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 China Resources with a short position of Titan Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and Titan Machinery.
Diversification Opportunities for China Resources and Titan Machinery
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and Titan is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and Titan Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Machinery and China Resources 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 China Resources Beer 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 China Resources i.e., China Resources and Titan Machinery go up and down completely randomly.
Pair Corralation between China Resources and Titan Machinery
Assuming the 90 days horizon China Resources Beer is expected to under-perform the Titan Machinery. In addition to that, China Resources is 1.04 times more volatile than Titan Machinery. It trades about -0.18 of its total potential returns per unit of risk. Titan Machinery is currently generating about -0.02 per unit of volatility. If you would invest 1,380 in Titan Machinery on October 11, 2024 and sell it today you would lose (50.00) from holding Titan Machinery or give up 3.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.44% |
| Values | Daily Returns |
China Resources Beer vs. Titan Machinery
Performance |
| Timeline |
| China Resources Beer |
| Titan Machinery |
China Resources and Titan Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and Titan Machinery
The main advantage of trading using opposite China Resources and Titan Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources 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.| China Resources vs. Tower Semiconductor | China Resources vs. Playmates Toys Limited | China Resources vs. ULTRA CLEAN HLDGS | China Resources vs. ePlay Digital |
| Titan Machinery vs. SOFI TECHNOLOGIES | Titan Machinery vs. Carnegie Clean Energy | Titan Machinery vs. BRIT AMER TOBACCO | Titan Machinery vs. British American Tobacco |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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