Correlation Between Alta Copper and Citigroup

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

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

Diversification Opportunities for Alta Copper and Citigroup

-0.32

Correlation Coefficient

Alta Copper  Citigroup

Very good diversification

The 3 months correlation between Alta and Citigroup is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Alta Copper Corp and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and Alta Copper 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 Alta Copper Corp 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 Alta Copper i.e., Alta Copper and Citigroup go up and down completely randomly.

Pair Corralation between Alta Copper and Citigroup

Assuming the 90 days trading horizon Alta Copper is expected to generate 4.39 times less return on investment than Citigroup. In addition to that, Alta Copper is 2.35 times more volatile than Citigroup. It trades about 0.01 of its total potential returns per unit of risk. Citigroup is currently generating about 0.07 per unit of volatility. If you would invest  5,105  in Citigroup on October 11, 2024 and sell it today you would earn a total of  2,160  from holding Citigroup or generate 42.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.53%
Values	Daily Returns

Alta Copper Corp  vs.  Citigroup

Alta Copper Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alta Copper Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Alta Copper is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Citigroup

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Citigroup has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very inconsistent forward indicators, Citigroup displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alta Copper and Citigroup

The main advantage of trading using opposite Alta Copper and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alta Copper 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 Alta Copper Corp 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .