Correlation Between Titan Cement and Dromeas SA

Can any of the company-specific risk be diversified away by investing in both Titan Cement and Dromeas SA 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 Dromeas SA 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 Dromeas SA, you can compare the effects of market volatilities on Titan Cement and Dromeas SA 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 Dromeas SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Cement and Dromeas SA.

Diversification Opportunities for Titan Cement and Dromeas SA

-0.49

Correlation Coefficient

Titan Cement  Dromeas SA

Very good diversification

The 3 months correlation between Titan and Dromeas is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Titan Cement International and Dromeas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dromeas SA 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 Dromeas SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dromeas SA has no effect on the direction of Titan Cement i.e., Titan Cement and Dromeas SA go up and down completely randomly.

Pair Corralation between Titan Cement and Dromeas SA

Assuming the 90 days trading horizon Titan Cement International is expected to generate 0.48 times more return on investment than Dromeas SA. However, Titan Cement International is 2.11 times less risky than Dromeas SA. It trades about 0.38 of its potential returns per unit of risk. Dromeas SA is currently generating about 0.02 per unit of risk. If you would invest  2,620  in Titan Cement International on February 5, 2024 and sell it today you would earn a total of  310.00  from holding Titan Cement International or generate 11.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Titan Cement International  vs.  Dromeas SA

Titan Cement Interna

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Titan Cement International are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Titan Cement unveiled solid returns over the last few months and may actually be approaching a breakup point.

Dromeas SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dromeas SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Dromeas SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Titan Cement and Dromeas SA

The main advantage of trading using opposite Titan Cement and Dromeas SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan Cement position performs unexpectedly, Dromeas SA 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 Dromeas SA will offset losses from the drop in Dromeas SA's long position.

The idea behind Titan Cement International and Dromeas SA 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.