Correlation Between Citigroup and Guangdong Marubi

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

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

Diversification Opportunities for Citigroup and Guangdong Marubi

0.68

Correlation Coefficient

Citigroup  Guangdong Marubi

Poor diversification

The 3 months correlation between Citigroup and Guangdong is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Guangdong Marubi Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Marubi Bio 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 Guangdong Marubi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Marubi Bio has no effect on the direction of Citigroup i.e., Citigroup and Guangdong Marubi go up and down completely randomly.

Pair Corralation between Citigroup and Guangdong Marubi

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.33 times less return on investment than Guangdong Marubi. But when comparing it to its historical volatility, Citigroup is 1.51 times less risky than Guangdong Marubi. It trades about 0.13 of its potential returns per unit of risk. Guangdong Marubi Biotechnology is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,118  in Guangdong Marubi Biotechnology on September 3, 2024 and sell it today you would earn a total of  797.00  from holding Guangdong Marubi Biotechnology or generate 37.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.63%
Values	Daily Returns

Citigroup  vs.  Guangdong Marubi Biotechnology

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.

Guangdong Marubi Bio

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Marubi Biotechnology are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Marubi sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Guangdong Marubi

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

The idea behind Citigroup and Guangdong Marubi Biotechnology 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..