Correlation Between Citigroup and Thong Nhat

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

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

Diversification Opportunities for Citigroup and Thong Nhat

0.37

Correlation Coefficient

Citigroup  Thong Nhat

Weak diversification

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

Pair Corralation between Citigroup and Thong Nhat

Taking into account the 90-day investment horizon Citigroup is expected to generate 36.24 times less return on investment than Thong Nhat. But when comparing it to its historical volatility, Citigroup is 2.15 times less risky than Thong Nhat. It trades about 0.01 of its potential returns per unit of risk. Thong Nhat JSC is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  3,685,274  in Thong Nhat JSC on September 30, 2024 and sell it today you would earn a total of  414,726  from holding Thong Nhat JSC or generate 11.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Citigroup  vs.  Thong Nhat JSC

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.

Thong Nhat JSC

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thong Nhat JSC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Thong Nhat displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Thong Nhat

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

The idea behind Citigroup and Thong Nhat JSC 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.