Correlation Between Citigroup and Risesun Real

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

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

Diversification Opportunities for Citigroup and Risesun Real

0.75

Correlation Coefficient

Citigroup  Risesun Real

Poor diversification

The 3 months correlation between Citigroup and Risesun is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Risesun Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Risesun Real Estate 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 Risesun Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Risesun Real Estate has no effect on the direction of Citigroup i.e., Citigroup and Risesun Real go up and down completely randomly.

Pair Corralation between Citigroup and Risesun Real

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.34 times more return on investment than Risesun Real. However, Citigroup is 2.95 times less risky than Risesun Real. It trades about 0.01 of its potential returns per unit of risk. Risesun Real Estate is currently generating about -0.14 per unit of risk. If you would invest  7,087  in Citigroup on September 29, 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 Together
Strength	Significant
Accuracy	90.91%
Values	Daily Returns

Citigroup  vs.  Risesun Real Estate

Citigroup

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Risesun Real Estate

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Risesun Real Estate are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Risesun Real may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Citigroup and Risesun Real

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

The idea behind Citigroup and Risesun Real Estate 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.