Correlation Between Citigroup and Tsinghuatongfang

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

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

Diversification Opportunities for Citigroup and Tsinghuatongfang

0.05

Correlation Coefficient

Citigroup  Tsinghuatongfang

Significant diversification

The 3 months correlation between Citigroup and Tsinghuatongfang is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Tsinghuatongfang Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsinghuatongfang 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 Tsinghuatongfang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tsinghuatongfang has no effect on the direction of Citigroup i.e., Citigroup and Tsinghuatongfang go up and down completely randomly.

Pair Corralation between Citigroup and Tsinghuatongfang

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.1 times less return on investment than Tsinghuatongfang. But when comparing it to its historical volatility, Citigroup is 1.69 times less risky than Tsinghuatongfang. It trades about 0.08 of its potential returns per unit of risk. Tsinghuatongfang Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  535.00  in Tsinghuatongfang Co on October 13, 2024 and sell it today you would earn a total of  97.00  from holding Tsinghuatongfang Co or generate 18.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.3%
Values	Daily Returns

Citigroup  vs.  Tsinghuatongfang Co

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 unfluctuating fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Tsinghuatongfang

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Tsinghuatongfang Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Tsinghuatongfang is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Tsinghuatongfang

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

The idea behind Citigroup and Tsinghuatongfang 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.