Correlation Between Citigroup and Betagro PCL

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

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

Diversification Opportunities for Citigroup and Betagro PCL

-0.87

Correlation Coefficient

Citigroup  Betagro PCL

Pay attention - limited upside

The 3 months correlation between Citigroup and Betagro is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Betagro PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Betagro PCL 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 Betagro PCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Betagro PCL has no effect on the direction of Citigroup i.e., Citigroup and Betagro PCL go up and down completely randomly.

Pair Corralation between Citigroup and Betagro PCL

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.84 times more return on investment than Betagro PCL. However, Citigroup is 1.19 times less risky than Betagro PCL. It trades about 0.07 of its potential returns per unit of risk. Betagro PCL is currently generating about -0.05 per unit of risk. If you would invest  4,308  in Citigroup on September 26, 2024 and sell it today you would earn a total of  2,792  from holding Citigroup or generate 64.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	97.18%
Values	Daily Returns

Citigroup  vs.  Betagro PCL

Citigroup

Risk-Adjusted Performance

10 of 100

OK

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.

Betagro PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Betagro PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Citigroup and Betagro PCL

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

The idea behind Citigroup and Betagro PCL 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.