Correlation Between Citigroup and Southern Petrochemicals
Can any of the company-specific risk be diversified away by investing in both Citigroup and Southern 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 Southern Petrochemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Southern Petrochemicals Industries, you can compare the effects of market volatilities on Citigroup and Southern 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 Southern Petrochemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Southern Petrochemicals.
Diversification Opportunities for Citigroup and Southern Petrochemicals
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citigroup and Southern is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Southern Petrochemicals Indust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern 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 Southern Petrochemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Petrochemicals has no effect on the direction of Citigroup i.e., Citigroup and Southern Petrochemicals go up and down completely randomly.
Pair Corralation between Citigroup and Southern Petrochemicals
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.82 times more return on investment than Southern Petrochemicals. However, Citigroup is 1.22 times less risky than Southern Petrochemicals. It trades about 0.01 of its potential returns per unit of risk. Southern Petrochemicals Industries is currently generating about -0.15 per unit of risk. If you would invest 7,087 in Citigroup on September 30, 2024 and sell it today you would earn a total of 13.00 from holding Citigroup or generate 0.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Southern Petrochemicals Indust
Performance |
| Timeline |
| Citigroup |
| Southern Petrochemicals |
Citigroup and Southern Petrochemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Southern Petrochemicals
The main advantage of trading using opposite Citigroup and Southern Petrochemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Southern 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 Southern Petrochemicals will offset losses from the drop in Southern Petrochemicals' long position.The idea behind Citigroup and Southern Petrochemicals 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.| Southern Petrochemicals vs. NMDC Limited | Southern Petrochemicals vs. Steel Authority of | Southern Petrochemicals vs. Embassy Office Parks | Southern Petrochemicals vs. Gujarat Narmada Valley |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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