Correlation Between Citigroup and Uchi Technologies

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

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

Diversification Opportunities for Citigroup and Uchi Technologies

0.6

Correlation Coefficient

Citigroup  Uchi Technologies

Poor diversification

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

Pair Corralation between Citigroup and Uchi Technologies

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.61 times more return on investment than Uchi Technologies. However, Citigroup is 1.61 times more volatile than Uchi Technologies Bhd. It trades about 0.19 of its potential returns per unit of risk. Uchi Technologies Bhd is currently generating about 0.06 per unit of risk. If you would invest  5,788  in Citigroup on September 14, 2024 and sell it today you would earn a total of  1,408  from holding Citigroup or generate 24.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Citigroup  vs.  Uchi Technologies Bhd

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.

Uchi Technologies Bhd

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Uchi Technologies Bhd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Uchi Technologies 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 Uchi Technologies

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

The idea behind Citigroup and Uchi Technologies 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.

Check out your portfolio center.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.