Correlation Between Citigroup and Hartalega Holdings

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

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

Diversification Opportunities for Citigroup and Hartalega Holdings

0.82

Correlation Coefficient

Citigroup  Hartalega Holdings

Very poor diversification

The 3 months correlation between Citigroup and Hartalega is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Hartalega Holdings Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartalega Holdings Bhd 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 Hartalega Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartalega Holdings Bhd has no effect on the direction of Citigroup i.e., Citigroup and Hartalega Holdings go up and down completely randomly.

Pair Corralation between Citigroup and Hartalega Holdings

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.31 times less return on investment than Hartalega Holdings. But when comparing it to its historical volatility, Citigroup is 1.12 times less risky than Hartalega Holdings. It trades about 0.09 of its potential returns per unit of risk. Hartalega Holdings Bhd is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  291.00  in Hartalega Holdings Bhd on October 14, 2024 and sell it today you would earn a total of  70.00  from holding Hartalega Holdings Bhd or generate 24.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Citigroup  vs.  Hartalega Holdings Bhd

Citigroup

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Hartalega Holdings Bhd

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hartalega Holdings Bhd are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Hartalega Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Hartalega Holdings

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

The idea behind Citigroup and Hartalega Holdings Bhd 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.