Correlation Between Citigroup and Atom Hoteles

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

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

Diversification Opportunities for Citigroup and Atom Hoteles

0.71

Correlation Coefficient

Citigroup  Atom Hoteles

Poor diversification

The 3 months correlation between Citigroup and Atom is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Atom Hoteles Socimi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atom Hoteles Socimi 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 Atom Hoteles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atom Hoteles Socimi has no effect on the direction of Citigroup i.e., Citigroup and Atom Hoteles go up and down completely randomly.

Pair Corralation between Citigroup and Atom Hoteles

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.27 times less return on investment than Atom Hoteles. But when comparing it to its historical volatility, Citigroup is 2.75 times less risky than Atom Hoteles. It trades about 0.15 of its potential returns per unit of risk. Atom Hoteles Socimi is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  975.00  in Atom Hoteles Socimi on September 5, 2024 and sell it today you would earn a total of  415.00  from holding Atom Hoteles Socimi or generate 42.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Citigroup  vs.  Atom Hoteles Socimi

Citigroup

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 11 (%) 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.

Atom Hoteles Socimi

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atom Hoteles Socimi are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Atom Hoteles exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Atom Hoteles

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

The idea behind Citigroup and Atom Hoteles Socimi 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.