Correlation Between Citigroup and Yunnan Chuangxin

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

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

Diversification Opportunities for Citigroup and Yunnan Chuangxin

-0.03

Correlation Coefficient

Citigroup  Yunnan Chuangxin

Good diversification

The 3 months correlation between Citigroup and Yunnan is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Yunnan Chuangxin New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yunnan Chuangxin New 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 Yunnan Chuangxin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yunnan Chuangxin New has no effect on the direction of Citigroup i.e., Citigroup and Yunnan Chuangxin go up and down completely randomly.

Pair Corralation between Citigroup and Yunnan Chuangxin

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.03 times more return on investment than Yunnan Chuangxin. However, Citigroup is 1.03 times more volatile than Yunnan Chuangxin New. It trades about 0.0 of its potential returns per unit of risk. Yunnan Chuangxin New is currently generating about -0.54 per unit of risk. If you would invest  7,149  in Citigroup on October 15, 2024 and sell it today you would lose (9.00) from holding Citigroup or give up 0.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Citigroup  vs.  Yunnan Chuangxin New

Citigroup

Risk-Adjusted Performance

11 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Yunnan Chuangxin New

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yunnan Chuangxin New has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Citigroup and Yunnan Chuangxin

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

The idea behind Citigroup and Yunnan Chuangxin New 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.