Correlation Between Citigroup and Cuckoo Electronics

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

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

Diversification Opportunities for Citigroup and Cuckoo Electronics

-0.39

Correlation Coefficient

Citigroup  Cuckoo Electronics

Very good diversification

The 3 months correlation between Citigroup and Cuckoo is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Cuckoo Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cuckoo Electronics 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 Cuckoo Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cuckoo Electronics has no effect on the direction of Citigroup i.e., Citigroup and Cuckoo Electronics go up and down completely randomly.

Pair Corralation between Citigroup and Cuckoo Electronics

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.07 times more return on investment than Cuckoo Electronics. However, Citigroup is 1.07 times more volatile than Cuckoo Electronics Co. It trades about 0.12 of its potential returns per unit of risk. Cuckoo Electronics Co is currently generating about -0.01 per unit of risk. If you would invest  6,092  in Citigroup on August 31, 2024 and sell it today you would earn a total of  924.00  from holding Citigroup or generate 15.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.06%
Values	Daily Returns

Citigroup  vs.  Cuckoo Electronics Co

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 unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Cuckoo Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cuckoo Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Cuckoo Electronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Cuckoo Electronics

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

The idea behind Citigroup and Cuckoo Electronics Co 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.