Correlation Between Citigroup and Altia Oyj

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

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

Diversification Opportunities for Citigroup and Altia Oyj

-0.88

Correlation Coefficient

Citigroup  Altia Oyj

Pay attention - limited upside

The 3 months correlation between Citigroup and Altia is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Altia Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altia Oyj 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 Altia Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altia Oyj has no effect on the direction of Citigroup i.e., Citigroup and Altia Oyj go up and down completely randomly.

Pair Corralation between Citigroup and Altia Oyj

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.42 times more return on investment than Altia Oyj. However, Citigroup is 1.42 times more volatile than Altia Oyj. It trades about 0.14 of its potential returns per unit of risk. Altia Oyj is currently generating about -0.45 per unit of risk. If you would invest  6,255  in Citigroup on September 23, 2024 and sell it today you would earn a total of  664.00  from holding Citigroup or generate 10.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	97.73%
Values	Daily Returns

Citigroup  vs.  Altia Oyj

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 unsteady fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Altia Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altia Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Citigroup and Altia Oyj

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

The idea behind Citigroup and Altia Oyj 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.