Correlation Between Citigroup and Raval ACS

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

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

Diversification Opportunities for Citigroup and Raval ACS

0.49

Correlation Coefficient

Citigroup  Raval ACS

Very weak diversification

The 3 months correlation between Citigroup and Raval is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Raval ACS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raval ACS 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 Raval ACS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raval ACS has no effect on the direction of Citigroup i.e., Citigroup and Raval ACS go up and down completely randomly.

Pair Corralation between Citigroup and Raval ACS

Taking into account the 90-day investment horizon Citigroup is expected to generate 10.88 times less return on investment than Raval ACS. But when comparing it to its historical volatility, Citigroup is 4.21 times less risky than Raval ACS. It trades about 0.19 of its potential returns per unit of risk. Raval ACS is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest  18,800  in Raval ACS on September 17, 2024 and sell it today you would earn a total of  5,600  from holding Raval ACS or generate 29.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	85.0%
Values	Daily Returns

Citigroup  vs.  Raval ACS

Citigroup

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 13 (%) 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.

Raval ACS

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Raval ACS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Raval ACS sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Raval ACS

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

The idea behind Citigroup and Raval ACS 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.