Correlation Between Citigroup and Sardar Chemical

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

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

Diversification Opportunities for Citigroup and Sardar Chemical

0.2

Correlation Coefficient

Citigroup  Sardar Chemical

Modest diversification

The 3 months correlation between Citigroup and Sardar is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Sardar Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sardar Chemical Indu 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 Sardar Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sardar Chemical Indu has no effect on the direction of Citigroup i.e., Citigroup and Sardar Chemical go up and down completely randomly.

Pair Corralation between Citigroup and Sardar Chemical

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.21 times less return on investment than Sardar Chemical. But when comparing it to its historical volatility, Citigroup is 2.24 times less risky than Sardar Chemical. It trades about 0.09 of its potential returns per unit of risk. Sardar Chemical Industries is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,808  in Sardar Chemical Industries on October 7, 2024 and sell it today you would earn a total of  470.00  from holding Sardar Chemical Industries or generate 16.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	53.23%
Values	Daily Returns

Citigroup  vs.  Sardar Chemical Industries

Citigroup

Risk-Adjusted Performance

9 of 100

OK

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.

Sardar Chemical Indu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sardar Chemical Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sardar Chemical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Sardar Chemical

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

The idea behind Citigroup and Sardar Chemical Industries 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.