Correlation Between Citigroup and Rechi Precision

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

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

Diversification Opportunities for Citigroup and Rechi Precision

-0.02

Correlation Coefficient

Citigroup  Rechi Precision

Good diversification

The 3 months correlation between Citigroup and Rechi is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Rechi Precision Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rechi Precision 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 Rechi Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rechi Precision has no effect on the direction of Citigroup i.e., Citigroup and Rechi Precision go up and down completely randomly.

Pair Corralation between Citigroup and Rechi Precision

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Rechi Precision. In addition to that, Citigroup is 2.32 times more volatile than Rechi Precision Co. It trades about -0.2 of its total potential returns per unit of risk. Rechi Precision Co is currently generating about 0.44 per unit of volatility. If you would invest  2,720  in Rechi Precision Co on December 4, 2024 and sell it today you would earn a total of  245.00  from holding Rechi Precision Co or generate 9.01% return on investment over 90 days.

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

Citigroup  vs.  Rechi Precision Co

Citigroup

Risk-Adjusted Performance

Weak

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.

Rechi Precision

Risk-Adjusted Performance

Good

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

Pair Trading with Citigroup and Rechi Precision

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

The idea behind Citigroup and Rechi Precision 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.