Correlation Between Citigroup and Aspen Pharmacare

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

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

Diversification Opportunities for Citigroup and Aspen Pharmacare

-0.88

Correlation Coefficient

Citigroup  Aspen Pharmacare

Pay attention - limited upside

The 3 months correlation between Citigroup and Aspen is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Aspen Pharmacare Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspen Pharmacare Holdings and Citigroup 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 Citigroup are associated (or correlated) with Aspen Pharmacare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspen Pharmacare Holdings has no effect on the direction of Citigroup i.e., Citigroup and Aspen Pharmacare go up and down completely randomly.

Pair Corralation between Citigroup and Aspen Pharmacare

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.94 times more return on investment than Aspen Pharmacare. However, Citigroup is 1.06 times less risky than Aspen Pharmacare. It trades about 0.07 of its potential returns per unit of risk. Aspen Pharmacare Holdings is currently generating about 0.04 per unit of risk. If you would invest  4,219  in Citigroup on September 23, 2024 and sell it today you would earn a total of  2,700  from holding Citigroup or generate 64.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.4%
Values	Daily Returns

Citigroup  vs.  Aspen Pharmacare Holdings

Citigroup

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Aspen Pharmacare Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aspen Pharmacare Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Citigroup and Aspen Pharmacare

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

The idea behind Citigroup and Aspen Pharmacare Holdings 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.