Correlation Between Citigroup and LPI Capital

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Can any of the company-specific risk be diversified away by investing in both Citigroup and LPI Capital 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 LPI Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and LPI Capital Bhd, you can compare the effects of market volatilities on Citigroup and LPI Capital 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 LPI Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and LPI Capital.

Diversification Opportunities for Citigroup and LPI Capital

-0.16
  Correlation Coefficient

Good diversification

The 3 months correlation between Citigroup and LPI is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and LPI Capital Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPI Capital 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 LPI Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPI Capital Bhd has no effect on the direction of Citigroup i.e., Citigroup and LPI Capital go up and down completely randomly.

Pair Corralation between Citigroup and LPI Capital

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.69 times more return on investment than LPI Capital. However, Citigroup is 1.69 times more volatile than LPI Capital Bhd. It trades about 0.02 of its potential returns per unit of risk. LPI Capital Bhd is currently generating about -0.25 per unit of risk. If you would invest  7,075  in Citigroup on September 26, 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 Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Citigroup  vs.  LPI Capital Bhd

 Performance 
       Timeline  
Citigroup 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
Good
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 uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.
LPI Capital Bhd 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days LPI Capital Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, LPI Capital is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Citigroup and LPI Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Citigroup and LPI Capital

The main advantage of trading using opposite Citigroup and LPI Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, LPI Capital 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 LPI Capital will offset losses from the drop in LPI Capital's long position.
The idea behind Citigroup and LPI Capital 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 Global Correlations module to find global opportunities by holding instruments from different markets.

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