Correlation Between Citigroup and Poongsan

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

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

Diversification Opportunities for Citigroup and Poongsan

-0.74

Correlation Coefficient

Citigroup  Poongsan

Pay attention - limited upside

The 3 months correlation between Citigroup and Poongsan is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Poongsan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poongsan 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 Poongsan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poongsan has no effect on the direction of Citigroup i.e., Citigroup and Poongsan go up and down completely randomly.

Pair Corralation between Citigroup and Poongsan

Taking into account the 90-day investment horizon Citigroup is expected to generate 4.76 times less return on investment than Poongsan. But when comparing it to its historical volatility, Citigroup is 1.88 times less risky than Poongsan. It trades about 0.09 of its potential returns per unit of risk. Poongsan is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  4,615,000  in Poongsan on October 10, 2024 and sell it today you would earn a total of  565,000  from holding Poongsan or generate 12.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Citigroup  vs.  Poongsan

Citigroup

Risk-Adjusted Performance

11 of 100

Good

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 unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Poongsan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Poongsan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Citigroup and Poongsan

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

The idea behind Citigroup and Poongsan 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.

Check out your portfolio center.

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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.