Correlation Between Aeris Indstria and Citigroup

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

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

Diversification Opportunities for Aeris Indstria and Citigroup

0.1

Correlation Coefficient

Aeris Indstria  Citigroup

Average diversification

The 3 months correlation between Aeris and Citigroup is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Aeris Indstria e and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and Aeris Indstria 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 Aeris Indstria e 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 Aeris Indstria i.e., Aeris Indstria and Citigroup go up and down completely randomly.

Pair Corralation between Aeris Indstria and Citigroup

Assuming the 90 days trading horizon Aeris Indstria e is expected to generate 12.54 times more return on investment than Citigroup. However, Aeris Indstria is 12.54 times more volatile than Citigroup. It trades about 0.16 of its potential returns per unit of risk. Citigroup is currently generating about 0.26 per unit of risk. If you would invest  564.00  in Aeris Indstria e on September 27, 2024 and sell it today you would earn a total of  222.00  from holding Aeris Indstria e or generate 39.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Aeris Indstria e  vs.  Citigroup

Aeris Indstria e

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aeris Indstria e are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Aeris Indstria unveiled solid returns over the last few months and may actually be approaching a breakup point.

Citigroup

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Citigroup sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aeris Indstria and Citigroup

The main advantage of trading using opposite Aeris Indstria and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeris Indstria 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 Aeris Indstria e 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.