Correlation Between Titan Cement and Quest Holdings

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

Diversification Opportunities for Titan Cement and Quest Holdings

0.38

Correlation Coefficient

Titan Cement  Quest Holdings

Weak diversification

The 3 months correlation between Titan and Quest is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Titan Cement International and Quest Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quest Holdings 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 Quest Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quest Holdings SA has no effect on the direction of Titan Cement i.e., Titan Cement and Quest Holdings go up and down completely randomly.

Pair Corralation between Titan Cement and Quest Holdings

Assuming the 90 days trading horizon Titan Cement International is expected to generate 0.49 times more return on investment than Quest Holdings. However, Titan Cement International is 2.06 times less risky than Quest Holdings. It trades about 0.41 of its potential returns per unit of risk. Quest Holdings SA is currently generating about 0.08 per unit of risk. If you would invest  2,620  in Titan Cement International on January 31, 2024 and sell it today you would earn a total of  335.00  from holding Titan Cement International or generate 12.79% return on investment over 90 days.

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

Titan Cement International  vs.  Quest Holdings SA

Titan Cement Interna

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Titan Cement International are ranked lower than 20 (%) 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.

Quest Holdings SA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quest Holdings SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Quest Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Titan Cement and Quest Holdings

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

The idea behind Titan Cement International and Quest Holdings 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.