Correlation Between Citigroup and VINACONEX

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

By analyzing existing cross correlation between Citigroup and VINACONEX 21, you can compare the effects of market volatilities on Citigroup and VINACONEX 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 VINACONEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and VINACONEX.

Diversification Opportunities for Citigroup and VINACONEX

0.56

Correlation Coefficient

Citigroup  VINACONEX

Very weak diversification

The 3 months correlation between Citigroup and VINACONEX is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and VINACONEX 21 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VINACONEX 21 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 VINACONEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VINACONEX 21 has no effect on the direction of Citigroup i.e., Citigroup and VINACONEX go up and down completely randomly.

Pair Corralation between Citigroup and VINACONEX

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.23 times less return on investment than VINACONEX. But when comparing it to its historical volatility, Citigroup is 1.66 times less risky than VINACONEX. It trades about 0.13 of its potential returns per unit of risk. VINACONEX 21 is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  600,000  in VINACONEX 21 on September 29, 2024 and sell it today you would earn a total of  90,000  from holding VINACONEX 21 or generate 15.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.65%
Values	Daily Returns

Citigroup  vs.  VINACONEX 21

Citigroup

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) 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.

VINACONEX 21

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VINACONEX 21 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, VINACONEX displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and VINACONEX

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

The idea behind Citigroup and VINACONEX 21 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..