Correlation Between Citigroup and Millcon Steel

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

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

Diversification Opportunities for Citigroup and Millcon Steel

-0.51

Correlation Coefficient

Citigroup  Millcon Steel

Excellent diversification

The 3 months correlation between Citigroup and Millcon is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Millcon Steel Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millcon Steel Public 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 Millcon Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millcon Steel Public has no effect on the direction of Citigroup i.e., Citigroup and Millcon Steel go up and down completely randomly.

Pair Corralation between Citigroup and Millcon Steel

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.1 times more return on investment than Millcon Steel. However, Citigroup is 9.64 times less risky than Millcon Steel. It trades about 0.25 of its potential returns per unit of risk. Millcon Steel Public is currently generating about -0.17 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 Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Citigroup  vs.  Millcon Steel Public

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.

Millcon Steel Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Millcon Steel Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Citigroup and Millcon Steel

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

The idea behind Citigroup and Millcon Steel Public 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.