Correlation Between HEICO and Titan Petrochemicals

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

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

Diversification Opportunities for HEICO and Titan Petrochemicals

0.0

Correlation Coefficient

HEICO  Titan Petrochemicals

Pay attention - limited upside

The 3 months correlation between HEICO and Titan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding HEICO and Titan Petrochemicals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Petrochemicals and HEICO 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 HEICO are associated (or correlated) with Titan Petrochemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan Petrochemicals has no effect on the direction of HEICO i.e., HEICO and Titan Petrochemicals go up and down completely randomly.

Pair Corralation between HEICO and Titan Petrochemicals

Assuming the 90 days horizon HEICO is expected to generate 0.75 times more return on investment than Titan Petrochemicals. However, HEICO is 1.34 times less risky than Titan Petrochemicals. It trades about 0.07 of its potential returns per unit of risk. Titan Petrochemicals Group is currently generating about -0.04 per unit of risk. If you would invest  12,069  in HEICO on June 11, 2024 and sell it today you would earn a total of  7,336  from holding HEICO or generate 60.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

HEICO  vs.  Titan Petrochemicals Group

HEICO

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HEICO are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, HEICO may actually be approaching a critical reversion point that can send shares even higher in October 2024.

Titan Petrochemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Titan Petrochemicals Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Titan Petrochemicals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with HEICO and Titan Petrochemicals

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

The idea behind HEICO and Titan Petrochemicals Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.