Correlation Between Citigroup and Sinotruk

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

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

Diversification Opportunities for Citigroup and Sinotruk

0.24

Correlation Coefficient

Citigroup  Sinotruk

Modest diversification

The 3 months correlation between Citigroup and Sinotruk is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Sinotruk Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinotruk Limited 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 Sinotruk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinotruk Limited has no effect on the direction of Citigroup i.e., Citigroup and Sinotruk go up and down completely randomly.

Pair Corralation between Citigroup and Sinotruk

Taking into account the 90-day investment horizon Citigroup is expected to generate 23.35 times less return on investment than Sinotruk. But when comparing it to its historical volatility, Citigroup is 1.88 times less risky than Sinotruk. It trades about 0.01 of its potential returns per unit of risk. Sinotruk Limited is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  258.00  in Sinotruk Limited on September 29, 2024 and sell it today you would earn a total of  18.00  from holding Sinotruk Limited or generate 6.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Citigroup  vs.  Sinotruk Limited

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

Sinotruk Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sinotruk Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sinotruk may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Citigroup and Sinotruk

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

The idea behind Citigroup and Sinotruk Limited 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.