Correlation Between Citigroup and Cerinnov Group

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

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

Diversification Opportunities for Citigroup and Cerinnov Group

-0.83

Correlation Coefficient

Citigroup  Cerinnov Group

Pay attention - limited upside

The 3 months correlation between Citigroup and Cerinnov is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Cerinnov Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cerinnov Group SA 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 Cerinnov Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cerinnov Group SA has no effect on the direction of Citigroup i.e., Citigroup and Cerinnov Group go up and down completely randomly.

Pair Corralation between Citigroup and Cerinnov Group

Taking into account the 90-day investment horizon Citigroup is expected to generate 3.0 times less return on investment than Cerinnov Group. But when comparing it to its historical volatility, Citigroup is 7.42 times less risky than Cerinnov Group. It trades about 0.05 of its potential returns per unit of risk. Cerinnov Group SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  72.00  in Cerinnov Group SA on September 28, 2024 and sell it today you would lose (2.00) from holding Cerinnov Group SA or give up 2.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Citigroup  vs.  Cerinnov Group SA

Citigroup

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) 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.

Cerinnov Group SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cerinnov Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Citigroup and Cerinnov Group

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

The idea behind Citigroup and Cerinnov Group SA 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.