Correlation Between Citigroup and Shenzhen Sunlord

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

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

Diversification Opportunities for Citigroup and Shenzhen Sunlord

0.79

Correlation Coefficient

Citigroup  Shenzhen Sunlord

Poor diversification

The 3 months correlation between Citigroup and Shenzhen is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Shenzhen Sunlord Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Sunlord Ele 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 Shenzhen Sunlord. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Sunlord Ele has no effect on the direction of Citigroup i.e., Citigroup and Shenzhen Sunlord go up and down completely randomly.

Pair Corralation between Citigroup and Shenzhen Sunlord

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.74 times more return on investment than Shenzhen Sunlord. However, Citigroup is 1.35 times less risky than Shenzhen Sunlord. It trades about 0.09 of its potential returns per unit of risk. Shenzhen Sunlord Electronics is currently generating about 0.06 per unit of risk. If you would invest  5,890  in Citigroup on September 19, 2024 and sell it today you would earn a total of  1,222  from holding Citigroup or generate 20.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.8%
Values	Daily Returns

Citigroup  vs.  Shenzhen Sunlord Electronics

Citigroup

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) 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.

Shenzhen Sunlord Ele

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Sunlord Electronics are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Sunlord sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Shenzhen Sunlord

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

The idea behind Citigroup and Shenzhen Sunlord Electronics 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.