Correlation Between Citigroup and Roshan Packages
Can any of the company-specific risk be diversified away by investing in both Citigroup and Roshan Packages 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 Roshan Packages into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Roshan Packages, you can compare the effects of market volatilities on Citigroup and Roshan Packages 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 Roshan Packages. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Roshan Packages.
Diversification Opportunities for Citigroup and Roshan Packages
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Citigroup and Roshan is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Roshan Packages in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roshan Packages 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 Roshan Packages. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roshan Packages has no effect on the direction of Citigroup i.e., Citigroup and Roshan Packages go up and down completely randomly.
Pair Corralation between Citigroup and Roshan Packages
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.71 times more return on investment than Roshan Packages. However, Citigroup is 1.42 times less risky than Roshan Packages. It trades about 0.25 of its potential returns per unit of risk. Roshan Packages is currently generating about 0.14 per unit of risk. If you would invest 6,360 in Citigroup on August 28, 2024 and sell it today you would earn a total of 715.00 from holding Citigroup or generate 11.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Roshan Packages
Performance |
| Timeline |
| Citigroup |
| Roshan Packages |
Citigroup and Roshan Packages Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Roshan Packages
The main advantage of trading using opposite Citigroup and Roshan Packages positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Roshan Packages 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 Roshan Packages will offset losses from the drop in Roshan Packages' long position.The idea behind Citigroup and Roshan Packages 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.| Roshan Packages vs. Masood Textile Mills | Roshan Packages vs. Fauji Foods | Roshan Packages vs. KSB Pumps | Roshan Packages vs. Mari Petroleum |
Check out your portfolio center.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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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