Correlation Between Citigroup and Wang Lee

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

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

Diversification Opportunities for Citigroup and Wang Lee

0.88

Correlation Coefficient

Citigroup  Wang Lee

Very poor diversification

The 3 months correlation between Citigroup and Wang is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Wang Lee Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wang Lee Group, 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 Wang Lee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wang Lee Group, has no effect on the direction of Citigroup i.e., Citigroup and Wang Lee go up and down completely randomly.

Pair Corralation between Citigroup and Wang Lee

Taking into account the 90-day investment horizon Citigroup is expected to generate 16.09 times less return on investment than Wang Lee. But when comparing it to its historical volatility, Citigroup is 6.33 times less risky than Wang Lee. It trades about 0.13 of its potential returns per unit of risk. Wang Lee Group, is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  56.00  in Wang Lee Group, on September 2, 2024 and sell it today you would earn a total of  417.00  from holding Wang Lee Group, or generate 744.64% return on investment over 90 days.

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

Citigroup  vs.  Wang Lee Group,

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

Wang Lee Group,

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wang Lee Group, are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Wang Lee unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Wang Lee

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

The idea behind Citigroup and Wang Lee Group, 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.