Correlation Between Citigroup and KEISEI EL

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

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

Diversification Opportunities for Citigroup and KEISEI EL

-0.04

Correlation Coefficient

Citigroup  KEISEI EL

Good diversification

The 3 months correlation between Citigroup and KEISEI is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and KEISEI EL RAILWAY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEISEI EL RAILWAY 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 KEISEI EL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEISEI EL RAILWAY has no effect on the direction of Citigroup i.e., Citigroup and KEISEI EL go up and down completely randomly.

Pair Corralation between Citigroup and KEISEI EL

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.21 times more return on investment than KEISEI EL. However, Citigroup is 4.79 times less risky than KEISEI EL. It trades about 0.14 of its potential returns per unit of risk. KEISEI EL RAILWAY is currently generating about -0.12 per unit of risk. If you would invest  6,117  in Citigroup on September 26, 2024 and sell it today you would earn a total of  983.00  from holding Citigroup or generate 16.07% return on investment over 90 days.

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

Citigroup  vs.  KEISEI EL RAILWAY

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.

KEISEI EL RAILWAY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KEISEI EL RAILWAY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Citigroup and KEISEI EL

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

The idea behind Citigroup and KEISEI EL RAILWAY 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.