Correlation Between Citigroup and Xinjiang Zhongtai

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

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

Diversification Opportunities for Citigroup and Xinjiang Zhongtai

0.46

Correlation Coefficient

Citigroup  Xinjiang Zhongtai

Very weak diversification

The 3 months correlation between Citigroup and Xinjiang is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Xinjiang Zhongtai Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinjiang Zhongtai 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 Xinjiang Zhongtai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinjiang Zhongtai has no effect on the direction of Citigroup i.e., Citigroup and Xinjiang Zhongtai go up and down completely randomly.

Pair Corralation between Citigroup and Xinjiang Zhongtai

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.37 times less return on investment than Xinjiang Zhongtai. But when comparing it to its historical volatility, Citigroup is 1.11 times less risky than Xinjiang Zhongtai. It trades about 0.21 of its potential returns per unit of risk. Xinjiang Zhongtai Chemical is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  340.00  in Xinjiang Zhongtai Chemical on September 11, 2024 and sell it today you would earn a total of  121.00  from holding Xinjiang Zhongtai Chemical or generate 35.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	90.63%
Values	Daily Returns

Citigroup  vs.  Xinjiang Zhongtai Chemical

Citigroup

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 16 (%) 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.

Xinjiang Zhongtai

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Xinjiang Zhongtai Chemical are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xinjiang Zhongtai sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Xinjiang Zhongtai

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

The idea behind Citigroup and Xinjiang Zhongtai Chemical 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.