Correlation Between Citigroup and KIM KINDEX

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

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

Diversification Opportunities for Citigroup and KIM KINDEX

0.46

Correlation Coefficient

Citigroup  KIM KINDEX

Very weak diversification

The 3 months correlation between Citigroup and KIM is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and KIM KINDEX Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIM KINDEX Japan 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 KIM KINDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KIM KINDEX Japan has no effect on the direction of Citigroup i.e., Citigroup and KIM KINDEX go up and down completely randomly.

Pair Corralation between Citigroup and KIM KINDEX

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.0 times less return on investment than KIM KINDEX. In addition to that, Citigroup is 1.15 times more volatile than KIM KINDEX Japan. It trades about 0.07 of its total potential returns per unit of risk. KIM KINDEX Japan is currently generating about 0.08 per unit of volatility. If you would invest  1,729,000  in KIM KINDEX Japan on September 25, 2024 and sell it today you would earn a total of  1,048,000  from holding KIM KINDEX Japan or generate 60.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.38%
Values	Daily Returns

Citigroup  vs.  KIM KINDEX Japan

Citigroup

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

KIM KINDEX Japan

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KIM KINDEX Japan are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, KIM KINDEX is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and KIM KINDEX

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

The idea behind Citigroup and KIM KINDEX Japan 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.