Correlation Between Citigroup and TIANQI LITHIUM

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

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

Diversification Opportunities for Citigroup and TIANQI LITHIUM

0.03

Correlation Coefficient

Citigroup  TIANQI LITHIUM

Significant diversification

The 3 months correlation between Citigroup and TIANQI is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and TIANQI LITHIUM H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TIANQI LITHIUM H 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 TIANQI LITHIUM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TIANQI LITHIUM H has no effect on the direction of Citigroup i.e., Citigroup and TIANQI LITHIUM go up and down completely randomly.

Pair Corralation between Citigroup and TIANQI LITHIUM

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.45 times more return on investment than TIANQI LITHIUM. However, Citigroup is 2.21 times less risky than TIANQI LITHIUM. It trades about 0.24 of its potential returns per unit of risk. TIANQI LITHIUM H is currently generating about -0.1 per unit of risk. If you would invest  6,895  in Citigroup on October 22, 2024 and sell it today you would earn a total of  1,104  from holding Citigroup or generate 16.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Citigroup  vs.  TIANQI LITHIUM H

Citigroup

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 17 (%) 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.

TIANQI LITHIUM H

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TIANQI LITHIUM H are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, TIANQI LITHIUM may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Citigroup and TIANQI LITHIUM

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

The idea behind Citigroup and TIANQI LITHIUM H 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.