Correlation Between Citigroup and Titan Cement

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

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

Diversification Opportunities for Citigroup and Titan Cement

0.82

Correlation Coefficient

Citigroup  Titan Cement

Very poor diversification

The 3 months correlation between Citigroup and Titan is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Titan Cement International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Cement Interna 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 Titan Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan Cement Interna has no effect on the direction of Citigroup i.e., Citigroup and Titan Cement go up and down completely randomly.

Pair Corralation between Citigroup and Titan Cement

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Titan Cement. In addition to that, Citigroup is 1.19 times more volatile than Titan Cement International. It trades about -0.06 of its total potential returns per unit of risk. Titan Cement International is currently generating about -0.01 per unit of volatility. If you would invest  3,940  in Titan Cement International on October 7, 2024 and sell it today you would lose (15.00) from holding Titan Cement International or give up 0.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.0%
Values	Daily Returns

Citigroup  vs.  Titan Cement International

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.

Titan Cement Interna

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Titan Cement International are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Titan Cement reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Titan Cement

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

The idea behind Citigroup and Titan Cement International 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.