Correlation Between Citigroup and Ams AG

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

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

Diversification Opportunities for Citigroup and Ams AG

0.13

Correlation Coefficient

Citigroup  Ams AG

Average diversification

The 3 months correlation between Citigroup and Ams is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Ams AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ams AG 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 Ams AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ams AG has no effect on the direction of Citigroup i.e., Citigroup and Ams AG go up and down completely randomly.

Pair Corralation between Citigroup and Ams AG

Taking into account the 90-day investment horizon Citigroup is expected to generate 6.25 times less return on investment than Ams AG. But when comparing it to its historical volatility, Citigroup is 2.13 times less risky than Ams AG. It trades about 0.05 of its potential returns per unit of risk. Ams AG is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  621.00  in Ams AG on December 26, 2024 and sell it today you would earn a total of  250.00  from holding Ams AG or generate 40.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Citigroup  vs.  Ams AG

Citigroup

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Ams AG

Risk-Adjusted Performance

Good

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

Pair Trading with Citigroup and Ams AG

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

The idea behind Citigroup and Ams AG 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.