Correlation Between Citigroup and Manali Petrochemicals

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

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

Diversification Opportunities for Citigroup and Manali Petrochemicals

-0.24

Correlation Coefficient

Citigroup  Manali Petrochemicals

Very good diversification

The 3 months correlation between Citigroup and Manali is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Manali Petrochemicals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manali Petrochemicals 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 Manali Petrochemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manali Petrochemicals has no effect on the direction of Citigroup i.e., Citigroup and Manali Petrochemicals go up and down completely randomly.

Pair Corralation between Citigroup and Manali Petrochemicals

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.92 times more return on investment than Manali Petrochemicals. However, Citigroup is 1.08 times less risky than Manali Petrochemicals. It trades about 0.02 of its potential returns per unit of risk. Manali Petrochemicals Limited is currently generating about -0.02 per unit of risk. If you would invest  7,086  in Citigroup on December 25, 2024 and sell it today you would earn a total of  112.00  from holding Citigroup or generate 1.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Citigroup  vs.  Manali Petrochemicals Limited

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Manali Petrochemicals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Manali Petrochemicals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Manali Petrochemicals is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Citigroup and Manali Petrochemicals

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

The idea behind Citigroup and Manali Petrochemicals 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.