Correlation Between Citigroup and LIWANLI Innovation

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

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

Diversification Opportunities for Citigroup and LIWANLI Innovation

0.58

Correlation Coefficient

Citigroup  LIWANLI Innovation

Very weak diversification

The 3 months correlation between Citigroup and LIWANLI is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and LIWANLI Innovation Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIWANLI Innovation 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 LIWANLI Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIWANLI Innovation has no effect on the direction of Citigroup i.e., Citigroup and LIWANLI Innovation go up and down completely randomly.

Pair Corralation between Citigroup and LIWANLI Innovation

Taking into account the 90-day investment horizon Citigroup is expected to generate 6.56 times less return on investment than LIWANLI Innovation. In addition to that, Citigroup is 1.23 times more volatile than LIWANLI Innovation Co. It trades about 0.04 of its total potential returns per unit of risk. LIWANLI Innovation Co is currently generating about 0.35 per unit of volatility. If you would invest  2,300  in LIWANLI Innovation Co on October 11, 2024 and sell it today you would earn a total of  190.00  from holding LIWANLI Innovation Co or generate 8.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  LIWANLI Innovation Co

Citigroup

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

LIWANLI Innovation

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LIWANLI Innovation Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, LIWANLI Innovation may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Citigroup and LIWANLI Innovation

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

The idea behind Citigroup and LIWANLI Innovation 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.