Correlation Between Citigroup and ALEFARM BREWING

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

By analyzing existing cross correlation between Citigroup and ALEFARM BREWING DK 05, you can compare the effects of market volatilities on Citigroup and ALEFARM BREWING 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 ALEFARM BREWING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and ALEFARM BREWING.

Diversification Opportunities for Citigroup and ALEFARM BREWING

-0.37

Correlation Coefficient

Citigroup  ALEFARM BREWING

Very good diversification

The 3 months correlation between Citigroup and ALEFARM is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and ALEFARM BREWING DK 05 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALEFARM BREWING DK 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 ALEFARM BREWING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALEFARM BREWING DK has no effect on the direction of Citigroup i.e., Citigroup and ALEFARM BREWING go up and down completely randomly.

Pair Corralation between Citigroup and ALEFARM BREWING

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.4 times more return on investment than ALEFARM BREWING. However, Citigroup is 2.51 times less risky than ALEFARM BREWING. It trades about 0.2 of its potential returns per unit of risk. ALEFARM BREWING DK 05 is currently generating about -0.03 per unit of risk. If you would invest  5,683  in Citigroup on September 12, 2024 and sell it today you would earn a total of  1,513  from holding Citigroup or generate 26.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  ALEFARM BREWING DK 05

Citigroup

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 16 (%) 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.

ALEFARM BREWING DK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALEFARM BREWING DK 05 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Citigroup and ALEFARM BREWING

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

The idea behind Citigroup and ALEFARM BREWING DK 05 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.