Correlation Between Citigroup and MITECH CoLtd

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

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

Diversification Opportunities for Citigroup and MITECH CoLtd

0.05

Correlation Coefficient

Citigroup  MITECH CoLtd

Significant diversification

The 3 months correlation between Citigroup and MITECH is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and MITECH CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MITECH CoLtd 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 MITECH CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MITECH CoLtd has no effect on the direction of Citigroup i.e., Citigroup and MITECH CoLtd go up and down completely randomly.

Pair Corralation between Citigroup and MITECH CoLtd

Taking into account the 90-day investment horizon Citigroup is expected to generate 16.58 times less return on investment than MITECH CoLtd. But when comparing it to its historical volatility, Citigroup is 1.87 times less risky than MITECH CoLtd. It trades about 0.02 of its potential returns per unit of risk. MITECH CoLtd is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  751,000  in MITECH CoLtd on September 22, 2024 and sell it today you would earn a total of  64,000  from holding MITECH CoLtd or generate 8.52% return on investment over 90 days.

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

Citigroup  vs.  MITECH CoLtd

Citigroup

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 7 (%) 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 January 2025.

MITECH CoLtd

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MITECH CoLtd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, MITECH CoLtd may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Citigroup and MITECH CoLtd

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

The idea behind Citigroup and MITECH CoLtd 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.