Correlation Between Citigroup and Jindal Stainless

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

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

Diversification Opportunities for Citigroup and Jindal Stainless

-0.09

Correlation Coefficient

Citigroup  Jindal Stainless

Good diversification

The 3 months correlation between Citigroup and Jindal is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Jindal Stainless Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jindal Stainless 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 Jindal Stainless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jindal Stainless has no effect on the direction of Citigroup i.e., Citigroup and Jindal Stainless go up and down completely randomly.

Pair Corralation between Citigroup and Jindal Stainless

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.18 times less return on investment than Jindal Stainless. But when comparing it to its historical volatility, Citigroup is 1.5 times less risky than Jindal Stainless. It trades about 0.06 of its potential returns per unit of risk. Jindal Stainless Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  25,216  in Jindal Stainless Limited on October 11, 2024 and sell it today you would earn a total of  39,329  from holding Jindal Stainless Limited or generate 155.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.18%
Values	Daily Returns

Citigroup  vs.  Jindal Stainless Limited

Citigroup

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Jindal Stainless

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jindal Stainless Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Citigroup and Jindal Stainless

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

The idea behind Citigroup and Jindal Stainless 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.