Correlation Between Citigroup and Talam Transform

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

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

Diversification Opportunities for Citigroup and Talam Transform

0.65

Correlation Coefficient

Citigroup  Talam Transform

Poor diversification

The 3 months correlation between Citigroup and Talam is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Talam Transform Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talam Transform 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 Talam Transform. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talam Transform Bhd has no effect on the direction of Citigroup i.e., Citigroup and Talam Transform go up and down completely randomly.

Pair Corralation between Citigroup and Talam Transform

Taking into account the 90-day investment horizon Citigroup is expected to generate 3.13 times less return on investment than Talam Transform. But when comparing it to its historical volatility, Citigroup is 6.94 times less risky than Talam Transform. It trades about 0.14 of its potential returns per unit of risk. Talam Transform Bhd is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2.50  in Talam Transform Bhd on September 26, 2024 and sell it today you would earn a total of  0.00  from holding Talam Transform Bhd or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Talam Transform Bhd

Citigroup

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) 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.

Talam Transform Bhd

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Talam Transform Bhd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Talam Transform disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Talam Transform

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

The idea behind Citigroup and Talam Transform 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.