Correlation Between Citigroup and 518600

Can any of the company-specific risk be diversified away by investing in both Citigroup and 518600 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 518600 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and 518600, you can compare the effects of market volatilities on Citigroup and 518600 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 518600. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and 518600.

Diversification Opportunities for Citigroup and 518600

0.54

Correlation Coefficient

Citigroup  518600

Very weak diversification

The 3 months correlation between Citigroup and 518600 is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and 518600 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 518600 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 518600. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 518600 has no effect on the direction of Citigroup i.e., Citigroup and 518600 go up and down completely randomly.

Pair Corralation between Citigroup and 518600

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.22 times more return on investment than 518600. However, Citigroup is 2.22 times more volatile than 518600. It trades about 0.13 of its potential returns per unit of risk. 518600 is currently generating about 0.15 per unit of risk. If you would invest  6,092  in Citigroup on September 1, 2024 and sell it today you would earn a total of  995.00  from holding Citigroup or generate 16.33% return on investment over 90 days.

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

Citigroup  vs.  518600

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

518600

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in 518600 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 518600 may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Citigroup and 518600

The main advantage of trading using opposite Citigroup and 518600 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, 518600 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 518600 will offset losses from the drop in 518600's long position.

The idea behind Citigroup and 518600 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.