Correlation Between Citigroup and Huizhou Desay

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

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

Diversification Opportunities for Citigroup and Huizhou Desay

0.4

Correlation Coefficient

Citigroup  Huizhou Desay

Very weak diversification

The 3 months correlation between Citigroup and Huizhou is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Huizhou Desay SV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huizhou Desay SV 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 Huizhou Desay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huizhou Desay SV has no effect on the direction of Citigroup i.e., Citigroup and Huizhou Desay go up and down completely randomly.

Pair Corralation between Citigroup and Huizhou Desay

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.59 times more return on investment than Huizhou Desay. However, Citigroup is 1.69 times less risky than Huizhou Desay. It trades about 0.02 of its potential returns per unit of risk. Huizhou Desay SV is currently generating about -0.29 per unit of risk. If you would invest  7,075  in Citigroup on September 25, 2024 and sell it today you would earn a total of  25.00  from holding Citigroup or generate 0.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Citigroup  vs.  Huizhou Desay SV

Citigroup

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 12 (%) 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.

Huizhou Desay SV

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Huizhou Desay SV are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Huizhou Desay sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Huizhou Desay

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

The idea behind Citigroup and Huizhou Desay SV 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.