Correlation Between Citigroup and Graphene Solar

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

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

Diversification Opportunities for Citigroup and Graphene Solar

-0.07

Correlation Coefficient

Citigroup  Graphene Solar

Good diversification

The 3 months correlation between Citigroup and Graphene is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Graphene Solar Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphene Solar Techn 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 Graphene Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graphene Solar Techn has no effect on the direction of Citigroup i.e., Citigroup and Graphene Solar go up and down completely randomly.

Pair Corralation between Citigroup and Graphene Solar

Taking into account the 90-day investment horizon Citigroup is expected to generate 126.35 times less return on investment than Graphene Solar. But when comparing it to its historical volatility, Citigroup is 101.7 times less risky than Graphene Solar. It trades about 0.16 of its potential returns per unit of risk. Graphene Solar Technologies is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2.44  in Graphene Solar Technologies on September 26, 2024 and sell it today you would earn a total of  0.26  from holding Graphene Solar Technologies or generate 10.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

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

Graphene Solar Techn

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Graphene Solar Technologies are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Graphene Solar showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Graphene Solar

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

The idea behind Citigroup and Graphene Solar 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.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.