Correlation Between Optima Health and Citigroup

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

By analyzing existing cross correlation between Optima Health plc and Citigroup, you can compare the effects of market volatilities on Optima Health and Citigroup 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 Optima Health with a short position of Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Health and Citigroup.

Diversification Opportunities for Optima Health and Citigroup

0.23

Correlation Coefficient

Optima Health  Citigroup

Modest diversification

The 3 months correlation between Optima and Citigroup is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Optima Health plc and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and Optima Health 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 Optima Health plc are associated (or correlated) with Citigroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citigroup has no effect on the direction of Optima Health i.e., Optima Health and Citigroup go up and down completely randomly.

Pair Corralation between Optima Health and Citigroup

Assuming the 90 days trading horizon Optima Health plc is expected to under-perform the Citigroup. In addition to that, Optima Health is 1.01 times more volatile than Citigroup. It trades about -0.37 of its total potential returns per unit of risk. Citigroup is currently generating about -0.16 per unit of volatility. If you would invest  7,002  in Citigroup on September 24, 2024 and sell it today you would lose (211.00) from holding Citigroup or give up 3.01% of portfolio value over 90 days.

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

Optima Health plc  vs.  Citigroup

Optima Health plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Optima Health plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Optima Health is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Citigroup

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Optima Health and Citigroup

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

The idea behind Optima Health plc and Citigroup 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.