Correlation Between Citigroup and 24SevenOffice Scandinavia

Can any of the company-specific risk be diversified away by investing in both Citigroup and 24SevenOffice Scandinavia 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 24SevenOffice Scandinavia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and 24SevenOffice Scandinavia AB, you can compare the effects of market volatilities on Citigroup and 24SevenOffice Scandinavia 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 24SevenOffice Scandinavia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and 24SevenOffice Scandinavia.

Diversification Opportunities for Citigroup and 24SevenOffice Scandinavia

0.61

Correlation Coefficient

Citigroup  24SevenOffice Scandinavia

Poor diversification

The 3 months correlation between Citigroup and 24SevenOffice is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and 24SevenOffice Scandinavia AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 24SevenOffice Scandinavia 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 24SevenOffice Scandinavia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 24SevenOffice Scandinavia has no effect on the direction of Citigroup i.e., Citigroup and 24SevenOffice Scandinavia go up and down completely randomly.

Pair Corralation between Citigroup and 24SevenOffice Scandinavia

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.55 times less return on investment than 24SevenOffice Scandinavia. But when comparing it to its historical volatility, Citigroup is 2.0 times less risky than 24SevenOffice Scandinavia. It trades about 0.13 of its potential returns per unit of risk. 24SevenOffice Scandinavia AB is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,890  in 24SevenOffice Scandinavia AB on September 3, 2024 and sell it today you would earn a total of  450.00  from holding 24SevenOffice Scandinavia AB or generate 23.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Citigroup  vs.  24SevenOffice Scandinavia AB

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

24SevenOffice Scandinavia

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 24SevenOffice Scandinavia AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, 24SevenOffice Scandinavia unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and 24SevenOffice Scandinavia

The main advantage of trading using opposite Citigroup and 24SevenOffice Scandinavia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, 24SevenOffice Scandinavia 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 24SevenOffice Scandinavia will offset losses from the drop in 24SevenOffice Scandinavia's long position.

The idea behind Citigroup and 24SevenOffice Scandinavia AB 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.