Correlation Between Citigroup and Coronation Industrial

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

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

Diversification Opportunities for Citigroup and Coronation Industrial

0.53

Correlation Coefficient

Citigroup  Coronation Industrial

Very weak diversification

The 3 months correlation between Citigroup and Coronation is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Coronation Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coronation Industrial 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 Coronation Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coronation Industrial has no effect on the direction of Citigroup i.e., Citigroup and Coronation Industrial go up and down completely randomly.

Pair Corralation between Citigroup and Coronation Industrial

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.94 times more return on investment than Coronation Industrial. However, Citigroup is 1.94 times more volatile than Coronation Industrial. It trades about 0.18 of its potential returns per unit of risk. Coronation Industrial is currently generating about 0.17 per unit of risk. If you would invest  5,788  in Citigroup on September 16, 2024 and sell it today you would earn a total of  1,313  from holding Citigroup or generate 22.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.92%
Values	Daily Returns

Citigroup  vs.  Coronation Industrial

Citigroup

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 13 (%) 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.

Coronation Industrial

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Coronation Industrial are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly inconsistent basic indicators, Coronation Industrial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Citigroup and Coronation Industrial

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

The idea behind Citigroup and Coronation Industrial 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.