Correlation Between Citigroup and Sunzen Biotech

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

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

Diversification Opportunities for Citigroup and Sunzen Biotech

-0.51

Correlation Coefficient

Citigroup  Sunzen Biotech

Excellent diversification

The 3 months correlation between Citigroup and Sunzen is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Sunzen Biotech Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunzen Biotech Bhd 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 Sunzen Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunzen Biotech Bhd has no effect on the direction of Citigroup i.e., Citigroup and Sunzen Biotech go up and down completely randomly.

Pair Corralation between Citigroup and Sunzen Biotech

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.31 times more return on investment than Sunzen Biotech. However, Citigroup is 1.31 times more volatile than Sunzen Biotech Bhd. It trades about 0.19 of its potential returns per unit of risk. Sunzen Biotech Bhd is currently generating about 0.01 per unit of risk. If you would invest  5,716  in Citigroup on September 13, 2024 and sell it today you would earn a total of  1,427  from holding Citigroup or generate 24.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

Citigroup  vs.  Sunzen Biotech Bhd

Citigroup

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 15 (%) 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.

Sunzen Biotech Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunzen Biotech Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Sunzen Biotech is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Citigroup and Sunzen Biotech

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

The idea behind Citigroup and Sunzen Biotech Bhd 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.