Correlation Between Citigroup and Comba Telecom

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

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

Diversification Opportunities for Citigroup and Comba Telecom

-0.62

Correlation Coefficient

Citigroup  Comba Telecom

Excellent diversification

The 3 months correlation between Citigroup and Comba is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Comba Telecom Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comba Telecom Systems 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 Comba Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comba Telecom Systems has no effect on the direction of Citigroup i.e., Citigroup and Comba Telecom go up and down completely randomly.

Pair Corralation between Citigroup and Comba Telecom

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.37 times more return on investment than Comba Telecom. However, Citigroup is 2.73 times less risky than Comba Telecom. It trades about 0.14 of its potential returns per unit of risk. Comba Telecom Systems is currently generating about 0.02 per unit of risk. If you would invest  6,159  in Citigroup on September 20, 2024 and sell it today you would earn a total of  953.00  from holding Citigroup or generate 15.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Citigroup  vs.  Comba Telecom Systems

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.

Comba Telecom Systems

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Comba Telecom Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Comba Telecom may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Citigroup and Comba Telecom

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

The idea behind Citigroup and Comba Telecom Systems 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..