Correlation Between Cathedral Energy and Titan Mining

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

Diversification Opportunities for Cathedral Energy and Titan Mining

-0.2
  Correlation Coefficient

Good diversification

The 3 months correlation between Cathedral and Titan is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Cathedral Energy Services and Titan Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Mining Corp and Cathedral Energy 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 Cathedral Energy Services are associated (or correlated) with Titan Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan Mining Corp has no effect on the direction of Cathedral Energy i.e., Cathedral Energy and Titan Mining go up and down completely randomly.

Pair Corralation between Cathedral Energy and Titan Mining

Assuming the 90 days trading horizon Cathedral Energy Services is expected to under-perform the Titan Mining. But the stock apears to be less risky and, when comparing its historical volatility, Cathedral Energy Services is 4.68 times less risky than Titan Mining. The stock trades about -0.02 of its potential returns per unit of risk. The Titan Mining Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  27.00  in Titan Mining Corp on January 20, 2024 and sell it today you would earn a total of  5.00  from holding Titan Mining Corp or generate 18.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Cathedral Energy Services  vs.  Titan Mining Corp

 Performance 
       Timeline  
Cathedral Energy Services 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Cathedral Energy Services are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Cathedral Energy is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
Titan Mining Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Titan Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Titan Mining is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Cathedral Energy and Titan Mining Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cathedral Energy and Titan Mining

The main advantage of trading using opposite Cathedral Energy and Titan Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathedral Energy position performs unexpectedly, Titan Mining 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 Mining will offset losses from the drop in Titan Mining's long position.
The idea behind Cathedral Energy Services and Titan Mining Corp 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.
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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