Correlation Between Titan Cement and Melexis NV

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Can any of the company-specific risk be diversified away by investing in both Titan Cement and Melexis NV 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 Cement and Melexis NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Titan Cement International and Melexis NV, you can compare the effects of market volatilities on Titan Cement and Melexis NV 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 Cement with a short position of Melexis NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Cement and Melexis NV.

Diversification Opportunities for Titan Cement and Melexis NV

-0.53
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Titan and Melexis is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Titan Cement International and Melexis NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melexis NV and Titan Cement 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 Cement International are associated (or correlated) with Melexis NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melexis NV has no effect on the direction of Titan Cement i.e., Titan Cement and Melexis NV go up and down completely randomly.

Pair Corralation between Titan Cement and Melexis NV

Assuming the 90 days trading horizon Titan Cement International is expected to generate 0.84 times more return on investment than Melexis NV. However, Titan Cement International is 1.2 times less risky than Melexis NV. It trades about 0.16 of its potential returns per unit of risk. Melexis NV is currently generating about -0.06 per unit of risk. If you would invest  1,944  in Titan Cement International on August 27, 2024 and sell it today you would earn a total of  1,861  from holding Titan Cement International or generate 95.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Titan Cement International  vs.  Melexis NV

 Performance 
       Timeline  
Titan Cement Interna 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Titan Cement International are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Titan Cement reported solid returns over the last few months and may actually be approaching a breakup point.
Melexis NV 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Melexis NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Titan Cement and Melexis NV Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Titan Cement and Melexis NV

The main advantage of trading using opposite Titan Cement and Melexis NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan Cement position performs unexpectedly, Melexis NV 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 Melexis NV will offset losses from the drop in Melexis NV's long position.
The idea behind Titan Cement International and Melexis NV 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.
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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