Correlation Between Mytilineos and Titan Cement

Can any of the company-specific risk be diversified away by investing in both Mytilineos and Titan Cement 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 Mytilineos and Titan Cement into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mytilineos SA and Titan Cement International, you can compare the effects of market volatilities on Mytilineos and Titan Cement 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 Mytilineos with a short position of Titan Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mytilineos and Titan Cement.

Diversification Opportunities for Mytilineos and Titan Cement

-0.45

Correlation Coefficient

Mytilineos  Titan Cement

Very good diversification

The 3 months correlation between Mytilineos and Titan is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Mytilineos SA and Titan Cement International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Cement Interna and Mytilineos 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 Mytilineos SA are associated (or correlated) with Titan Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan Cement Interna has no effect on the direction of Mytilineos i.e., Mytilineos and Titan Cement go up and down completely randomly.

Pair Corralation between Mytilineos and Titan Cement

Assuming the 90 days trading horizon Mytilineos SA is expected to generate 1.03 times more return on investment than Titan Cement. However, Mytilineos is 1.03 times more volatile than Titan Cement International. It trades about 0.33 of its potential returns per unit of risk. Titan Cement International is currently generating about 0.34 per unit of risk. If you would invest  3,456  in Mytilineos SA on January 30, 2024 and sell it today you would earn a total of  344.00  from holding Mytilineos SA or generate 9.95% return on investment over 90 days.

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

Mytilineos SA  vs.  Titan Cement International

Mytilineos SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Titan Cement Interna

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Titan Cement International are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Titan Cement unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mytilineos and Titan Cement

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

The idea behind Mytilineos SA and Titan Cement International 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 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.