Correlation Between Citigroup and Inix Technologies

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

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

Diversification Opportunities for Citigroup and Inix Technologies

-0.47

Correlation Coefficient

Citigroup  Inix Technologies

Very good diversification

The 3 months correlation between Citigroup and Inix is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Inix Technologies Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inix Technologies 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 Inix Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inix Technologies has no effect on the direction of Citigroup i.e., Citigroup and Inix Technologies go up and down completely randomly.

Pair Corralation between Citigroup and Inix Technologies

Taking into account the 90-day investment horizon Citigroup is expected to generate 7.05 times less return on investment than Inix Technologies. But when comparing it to its historical volatility, Citigroup is 16.4 times less risky than Inix Technologies. It trades about 0.18 of its potential returns per unit of risk. Inix Technologies Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1.50  in Inix Technologies Holdings on September 16, 2024 and sell it today you would lose (1.00) from holding Inix Technologies Holdings or give up 66.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Citigroup  vs.  Inix Technologies Holdings

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.

Inix Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Inix Technologies Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Inix Technologies disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Inix Technologies

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

The idea behind Citigroup and Inix Technologies Holdings 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.