Correlation Between Citigroup and QL Resources

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

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

Diversification Opportunities for Citigroup and QL Resources

0.6

Correlation Coefficient

Citigroup  QL Resources

Poor diversification

The 3 months correlation between Citigroup and 7084 is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and QL Resources Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QL Resources Bhd 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 QL Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QL Resources Bhd has no effect on the direction of Citigroup i.e., Citigroup and QL Resources go up and down completely randomly.

Pair Corralation between Citigroup and QL Resources

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.46 times more return on investment than QL Resources. However, Citigroup is 1.46 times more volatile than QL Resources Bhd. It trades about 0.02 of its potential returns per unit of risk. QL Resources Bhd is currently generating about -0.06 per unit of risk. If you would invest  7,075  in Citigroup on September 25, 2024 and sell it today you would earn a total of  25.00  from holding Citigroup or generate 0.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Citigroup  vs.  QL Resources Bhd

Citigroup

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 12 (%) 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.

QL Resources Bhd

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in QL Resources Bhd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, QL Resources is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Citigroup and QL Resources

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

The idea behind Citigroup and QL Resources Bhd 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.