Correlation Between Citigroup and Shih Wei

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

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

Diversification Opportunities for Citigroup and Shih Wei

-0.48

Correlation Coefficient

Citigroup  Shih Wei

Very good diversification

The 3 months correlation between Citigroup and Shih is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Shih Wei Navigation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shih Wei Navigation 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 Shih Wei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shih Wei Navigation has no effect on the direction of Citigroup i.e., Citigroup and Shih Wei go up and down completely randomly.

Pair Corralation between Citigroup and Shih Wei

Taking into account the 90-day investment horizon Citigroup is expected to generate 5.31 times less return on investment than Shih Wei. But when comparing it to its historical volatility, Citigroup is 1.31 times less risky than Shih Wei. It trades about 0.04 of its potential returns per unit of risk. Shih Wei Navigation is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,670  in Shih Wei Navigation on December 20, 2024 and sell it today you would earn a total of  435.00  from holding Shih Wei Navigation or generate 26.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.33%
Values	Daily Returns

Citigroup  vs.  Shih Wei Navigation

Citigroup

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 3 (%) 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.

Shih Wei Navigation

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shih Wei Navigation are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Shih Wei showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Shih Wei

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

The idea behind Citigroup and Shih Wei Navigation 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.