Correlation Between Romana Food and Citigroup

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

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

Diversification Opportunities for Romana Food and Citigroup

0.0

Correlation Coefficient

Romana Food  Citigroup

Pay attention - limited upside

The 3 months correlation between Romana and Citigroup is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Romana Food Brands and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and Romana Food 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 Romana Food Brands are associated (or correlated) with Citigroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citigroup has no effect on the direction of Romana Food i.e., Romana Food and Citigroup go up and down completely randomly.

Pair Corralation between Romana Food and Citigroup

If you would invest  6,516  in Citigroup on October 11, 2024 and sell it today you would earn a total of  810.00  from holding Citigroup or generate 12.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Romana Food Brands  vs.  Citigroup

Romana Food Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Romana Food Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Romana Food is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Citigroup

Risk-Adjusted Performance

8 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 8 (%) 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.

Pair Trading with Romana Food and Citigroup

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

The idea behind Romana Food Brands and Citigroup 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.