Correlation Between Citigroup and Xiamen ITG

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

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

Diversification Opportunities for Citigroup and Xiamen ITG

-0.5

Correlation Coefficient

Citigroup  Xiamen ITG

Very good diversification

The 3 months correlation between Citigroup and Xiamen is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Xiamen ITG Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiamen ITG Group 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 Xiamen ITG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiamen ITG Group has no effect on the direction of Citigroup i.e., Citigroup and Xiamen ITG go up and down completely randomly.

Pair Corralation between Citigroup and Xiamen ITG

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.9 times more return on investment than Xiamen ITG. However, Citigroup is 1.9 times more volatile than Xiamen ITG Group. It trades about 0.04 of its potential returns per unit of risk. Xiamen ITG Group is currently generating about -0.02 per unit of risk. If you would invest  6,929  in Citigroup on December 21, 2024 and sell it today you would earn a total of  269.00  from holding Citigroup or generate 3.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.67%
Values	Daily Returns

Citigroup  vs.  Xiamen ITG Group

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.

Xiamen ITG Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xiamen ITG Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Xiamen ITG 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 Xiamen ITG

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

The idea behind Citigroup and Xiamen ITG Group 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.