Correlation Between Citigroup and THiRA-UTECH

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

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

Diversification Opportunities for Citigroup and THiRA-UTECH

-0.22

Correlation Coefficient

Citigroup  THiRA-UTECH

Very good diversification

The 3 months correlation between Citigroup and THiRA-UTECH is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and THiRA UTECH LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THiRA UTECH LTD 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 THiRA-UTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THiRA UTECH LTD has no effect on the direction of Citigroup i.e., Citigroup and THiRA-UTECH go up and down completely randomly.

Pair Corralation between Citigroup and THiRA-UTECH

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.11 times less return on investment than THiRA-UTECH. But when comparing it to its historical volatility, Citigroup is 3.09 times less risky than THiRA-UTECH. It trades about 0.08 of its potential returns per unit of risk. THiRA UTECH LTD is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  231,333  in THiRA UTECH LTD on September 14, 2024 and sell it today you would earn a total of  244,167  from holding THiRA UTECH LTD or generate 105.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.57%
Values	Daily Returns

Citigroup  vs.  THiRA UTECH LTD

Citigroup

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 14 (%) 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.

THiRA UTECH LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days THiRA UTECH LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, THiRA-UTECH 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 THiRA-UTECH

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

The idea behind Citigroup and THiRA UTECH LTD 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.