Correlation Between Citigroup and Air Asia

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

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

Diversification Opportunities for Citigroup and Air Asia

0.44

Correlation Coefficient

Citigroup  Air Asia

Very weak diversification

The 3 months correlation between Citigroup and Air is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Air Asia Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Asia 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 Air Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Asia has no effect on the direction of Citigroup i.e., Citigroup and Air Asia go up and down completely randomly.

Pair Corralation between Citigroup and Air Asia

Taking into account the 90-day investment horizon Citigroup is expected to generate 4.51 times less return on investment than Air Asia. But when comparing it to its historical volatility, Citigroup is 1.63 times less risky than Air Asia. It trades about 0.05 of its potential returns per unit of risk. Air Asia Co is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,192  in Air Asia Co on December 26, 2024 and sell it today you would earn a total of  808.00  from holding Air Asia Co or generate 25.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	91.67%
Values	Daily Returns

Citigroup  vs.  Air Asia Co

Citigroup

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 4 (%) 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 April 2025.

Air Asia

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Air Asia Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Air Asia showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Air Asia

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

The idea behind Citigroup and Air Asia Co 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 Global Correlations module to find global opportunities by holding instruments from different markets.