Correlation Between Titan Company and Agfa-Gevaert
Can any of the company-specific risk be diversified away by investing in both Titan Company and Agfa-Gevaert 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 Agfa-Gevaert 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 Agfa Gevaert NV, you can compare the effects of market volatilities on Titan Company and Agfa-Gevaert 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 Agfa-Gevaert. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Company and Agfa-Gevaert.
Diversification Opportunities for Titan Company and Agfa-Gevaert
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Titan and Agfa-Gevaert is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and Agfa Gevaert NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agfa Gevaert NV 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 Agfa-Gevaert. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agfa Gevaert NV has no effect on the direction of Titan Company i.e., Titan Company and Agfa-Gevaert go up and down completely randomly.
Pair Corralation between Titan Company and Agfa-Gevaert
Assuming the 90 days trading horizon Titan Company Limited is expected to generate 0.27 times more return on investment than Agfa-Gevaert. However, Titan Company Limited is 3.69 times less risky than Agfa-Gevaert. It trades about -0.1 of its potential returns per unit of risk. Agfa Gevaert NV is currently generating about -0.15 per unit of risk. If you would invest 360,770 in Titan Company Limited on September 4, 2024 and sell it today you would lose (30,085) from holding Titan Company Limited or give up 8.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.88% |
| Values | Daily Returns |
Titan Company Limited vs. Agfa Gevaert NV
Performance |
| Timeline |
| Titan Limited |
| Agfa Gevaert NV |
Titan Company and Agfa-Gevaert Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Titan Company and Agfa-Gevaert
The main advantage of trading using opposite Titan Company and Agfa-Gevaert positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan Company position performs unexpectedly, Agfa-Gevaert 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 Agfa-Gevaert will offset losses from the drop in Agfa-Gevaert's long position.| Titan Company vs. Sintex Plastics Technology | Titan Company vs. Ankit Metal Power | Titan Company vs. Styrenix Performance Materials | Titan Company vs. LLOYDS METALS AND |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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