Correlation Between AAC TECHNOLOGHLDGADR and Citigroup

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

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

Diversification Opportunities for AAC TECHNOLOGHLDGADR and Citigroup

0.79

Correlation Coefficient

AAC TECHNOLOGHLDGADR  Citigroup

Poor diversification

The 3 months correlation between AAC and Citigroup is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding AAC TECHNOLOGHLDGADR and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR i.e., AAC TECHNOLOGHLDGADR and Citigroup go up and down completely randomly.

Pair Corralation between AAC TECHNOLOGHLDGADR and Citigroup

Assuming the 90 days horizon AAC TECHNOLOGHLDGADR is expected to generate 1.86 times more return on investment than Citigroup. However, AAC TECHNOLOGHLDGADR is 1.86 times more volatile than Citigroup. It trades about 0.19 of its potential returns per unit of risk. Citigroup is currently generating about 0.21 per unit of risk. If you would invest  314.00  in AAC TECHNOLOGHLDGADR on September 17, 2024 and sell it today you would earn a total of  146.00  from holding AAC TECHNOLOGHLDGADR or generate 46.5% return on investment over 90 days.

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

AAC TECHNOLOGHLDGADR  vs.  Citigroup

AAC TECHNOLOGHLDGADR

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AAC TECHNOLOGHLDGADR are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AAC TECHNOLOGHLDGADR reported solid returns over the last few months and may actually be approaching a breakup point.

Citigroup

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AAC TECHNOLOGHLDGADR and Citigroup

The main advantage of trading using opposite AAC TECHNOLOGHLDGADR and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..