Correlation Between Citigroup and Falmaco Nonwoven

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

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

Diversification Opportunities for Citigroup and Falmaco Nonwoven

0.4

Correlation Coefficient

Citigroup  Falmaco Nonwoven

Very weak diversification

The 3 months correlation between Citigroup and Falmaco is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Falmaco Nonwoven Industri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falmaco Nonwoven Industri 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 Falmaco Nonwoven. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falmaco Nonwoven Industri has no effect on the direction of Citigroup i.e., Citigroup and Falmaco Nonwoven go up and down completely randomly.

Pair Corralation between Citigroup and Falmaco Nonwoven

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.13 times more return on investment than Falmaco Nonwoven. However, Citigroup is 7.48 times less risky than Falmaco Nonwoven. It trades about 0.25 of its potential returns per unit of risk. Falmaco Nonwoven Industri is currently generating about -0.13 per unit of risk. If you would invest  6,815  in Citigroup on September 15, 2024 and sell it today you would earn a total of  286.00  from holding Citigroup or generate 4.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Falmaco Nonwoven Industri

Citigroup

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 13 (%) 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.

Falmaco Nonwoven Industri

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Falmaco Nonwoven Industri has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Falmaco Nonwoven is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Citigroup and Falmaco Nonwoven

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

The idea behind Citigroup and Falmaco Nonwoven Industri 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.