Correlation Between Citigroup and Engineers India

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

By analyzing existing cross correlation between Citigroup and Engineers India Limited, you can compare the effects of market volatilities on Citigroup and Engineers India 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 Engineers India. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Engineers India.

Diversification Opportunities for Citigroup and Engineers India

-0.1

Correlation Coefficient

Citigroup  Engineers India

Good diversification

The 3 months correlation between Citigroup and Engineers is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Engineers India Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engineers India 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 Engineers India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engineers India has no effect on the direction of Citigroup i.e., Citigroup and Engineers India go up and down completely randomly.

Pair Corralation between Citigroup and Engineers India

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.05 times less return on investment than Engineers India. But when comparing it to its historical volatility, Citigroup is 1.97 times less risky than Engineers India. It trades about 0.07 of its potential returns per unit of risk. Engineers India Limited is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  7,632  in Engineers India Limited on September 23, 2024 and sell it today you would earn a total of  10,736  from holding Engineers India Limited or generate 140.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.99%
Values	Daily Returns

Citigroup  vs.  Engineers India Limited

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.

Engineers India

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Engineers India Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Citigroup and Engineers India

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

The idea behind Citigroup and Engineers India Limited 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.