Correlation Between Citigroup and Wangneng Environment

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

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

Diversification Opportunities for Citigroup and Wangneng Environment

-0.52

Correlation Coefficient

Citigroup  Wangneng Environment

Excellent diversification

The 3 months correlation between Citigroup and Wangneng is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Wangneng Environment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wangneng Environment 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 Wangneng Environment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wangneng Environment has no effect on the direction of Citigroup i.e., Citigroup and Wangneng Environment go up and down completely randomly.

Pair Corralation between Citigroup and Wangneng Environment

Taking into account the 90-day investment horizon Citigroup is expected to generate 4.89 times less return on investment than Wangneng Environment. But when comparing it to its historical volatility, Citigroup is 1.49 times less risky than Wangneng Environment. It trades about 0.03 of its potential returns per unit of risk. Wangneng Environment Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,582  in Wangneng Environment Co on December 29, 2024 and sell it today you would earn a total of  271.00  from holding Wangneng Environment Co or generate 17.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.08%
Values	Daily Returns

Citigroup  vs.  Wangneng Environment Co

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Wangneng Environment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wangneng Environment Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Wangneng Environment sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Wangneng Environment

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

The idea behind Citigroup and Wangneng Environment Co 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.