Correlation Between Citigroup and Sinosun Tech

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

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

Diversification Opportunities for Citigroup and Sinosun Tech

-0.24

Correlation Coefficient

Citigroup  Sinosun Tech

Very good diversification

The 3 months correlation between Citigroup and Sinosun is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Sinosun Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinosun Tech 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 Sinosun Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinosun Tech has no effect on the direction of Citigroup i.e., Citigroup and Sinosun Tech go up and down completely randomly.

Pair Corralation between Citigroup and Sinosun Tech

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.41 times more return on investment than Sinosun Tech. However, Citigroup is 2.46 times less risky than Sinosun Tech. It trades about 0.03 of its potential returns per unit of risk. Sinosun Tech is currently generating about -0.1 per unit of risk. If you would invest  7,051  in Citigroup on December 24, 2024 and sell it today you would earn a total of  147.00  from holding Citigroup or generate 2.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.67%
Values	Daily Returns

Citigroup  vs.  Sinosun Tech

Citigroup

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Sinosun Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sinosun Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Citigroup and Sinosun Tech

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

The idea behind Citigroup and Sinosun Tech 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.