Correlation Between Titan Machinery and Zoomlion Heavy
Can any of the company-specific risk be diversified away by investing in both Titan Machinery and Zoomlion Heavy 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 Zoomlion Heavy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Titan Machinery and Zoomlion Heavy Industry, you can compare the effects of market volatilities on Titan Machinery and Zoomlion Heavy 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 Zoomlion Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Machinery and Zoomlion Heavy.
Diversification Opportunities for Titan Machinery and Zoomlion Heavy
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Titan and Zoomlion is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and Zoomlion Heavy Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zoomlion Heavy Industry 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 Zoomlion Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zoomlion Heavy Industry has no effect on the direction of Titan Machinery i.e., Titan Machinery and Zoomlion Heavy go up and down completely randomly.
Pair Corralation between Titan Machinery and Zoomlion Heavy
Given the investment horizon of 90 days Titan Machinery is expected to under-perform the Zoomlion Heavy. But the stock apears to be less risky and, when comparing its historical volatility, Titan Machinery is 1.15 times less risky than Zoomlion Heavy. The stock trades about -0.06 of its potential returns per unit of risk. The Zoomlion Heavy Industry is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 51.00 in Zoomlion Heavy Industry on September 2, 2024 and sell it today you would earn a total of 22.00 from holding Zoomlion Heavy Industry or generate 43.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 43.15% |
| Values | Daily Returns |
Titan Machinery vs. Zoomlion Heavy Industry
Performance |
| Timeline |
| Titan Machinery |
| Zoomlion Heavy Industry |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Titan Machinery and Zoomlion Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Titan Machinery and Zoomlion Heavy
The main advantage of trading using opposite Titan Machinery and Zoomlion Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan Machinery position performs unexpectedly, Zoomlion Heavy 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 Zoomlion Heavy will offset losses from the drop in Zoomlion Heavy's long position.| Titan Machinery vs. Oil States International | Titan Machinery vs. Oceaneering International | Titan Machinery vs. Geospace Technologies | Titan Machinery vs. Newpark Resources |
| Zoomlion Heavy vs. Transportadora de Gas | Zoomlion Heavy vs. Titan Machinery | Zoomlion Heavy vs. Capital Clean Energy | Zoomlion Heavy vs. Simon Property Group |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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