Correlation Between Citigroup and Pum Tech

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

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

Diversification Opportunities for Citigroup and Pum Tech

0.42

Correlation Coefficient

Citigroup  Pum Tech

Very weak diversification

The 3 months correlation between Citigroup and Pum is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Pum Tech Korea Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pum Tech Korea 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 Pum Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pum Tech Korea has no effect on the direction of Citigroup i.e., Citigroup and Pum Tech go up and down completely randomly.

Pair Corralation between Citigroup and Pum Tech

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.32 times less return on investment than Pum Tech. But when comparing it to its historical volatility, Citigroup is 1.78 times less risky than Pum Tech. It trades about 0.14 of its potential returns per unit of risk. Pum Tech Korea Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,495,000  in Pum Tech Korea Co on September 26, 2024 and sell it today you would earn a total of  670,000  from holding Pum Tech Korea Co or generate 19.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Citigroup  vs.  Pum Tech Korea Co

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.

Pum Tech Korea

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pum Tech Korea Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Pum Tech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Pum Tech

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

The idea behind Citigroup and Pum Tech Korea 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.