Correlation Between Citigroup and Beijing Dalong

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

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

Diversification Opportunities for Citigroup and Beijing Dalong

0.3

Correlation Coefficient

Citigroup  Beijing Dalong

Weak diversification

The 3 months correlation between Citigroup and Beijing is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Beijing Dalong Weiye in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Dalong Weiye 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 Beijing Dalong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Dalong Weiye has no effect on the direction of Citigroup i.e., Citigroup and Beijing Dalong go up and down completely randomly.

Pair Corralation between Citigroup and Beijing Dalong

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.53 times more return on investment than Beijing Dalong. However, Citigroup is 1.87 times less risky than Beijing Dalong. It trades about 0.14 of its potential returns per unit of risk. Beijing Dalong Weiye is currently generating about -0.08 per unit of risk. If you would invest  6,268  in Citigroup on October 8, 2024 and sell it today you would earn a total of  1,006  from holding Citigroup or generate 16.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

Citigroup  vs.  Beijing Dalong Weiye

Citigroup

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Beijing Dalong Weiye

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beijing Dalong Weiye has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Citigroup and Beijing Dalong

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

The idea behind Citigroup and Beijing Dalong Weiye 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.