Correlation Between Citigroup and British Amer

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

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

Diversification Opportunities for Citigroup and British Amer

-0.35

Correlation Coefficient

Citigroup  British Amer

Very good diversification

The 3 months correlation between Citigroup and British is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and biOasis Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on biOasis Technologies 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 British Amer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of biOasis Technologies has no effect on the direction of Citigroup i.e., Citigroup and British Amer go up and down completely randomly.

Pair Corralation between Citigroup and British Amer

Taking into account the 90-day investment horizon Citigroup is expected to generate 313.76 times less return on investment than British Amer. But when comparing it to its historical volatility, Citigroup is 191.68 times less risky than British Amer. It trades about 0.26 of its potential returns per unit of risk. biOasis Technologies is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest  0.50  in biOasis Technologies on September 1, 2024 and sell it today you would earn a total of  125.50  from holding biOasis Technologies or generate 25100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Citigroup  vs.  biOasis Technologies

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 unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

biOasis Technologies

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in biOasis Technologies are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, British Amer showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and British Amer

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

The idea behind Citigroup and biOasis Technologies 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.