Correlation Between Citigroup and Zhuzhou Kibing

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

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

Diversification Opportunities for Citigroup and Zhuzhou Kibing

0.33

Correlation Coefficient

Citigroup  Zhuzhou Kibing

Weak diversification

The 3 months correlation between Citigroup and Zhuzhou is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Zhuzhou Kibing Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhuzhou Kibing 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 Zhuzhou Kibing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhuzhou Kibing Group has no effect on the direction of Citigroup i.e., Citigroup and Zhuzhou Kibing go up and down completely randomly.

Pair Corralation between Citigroup and Zhuzhou Kibing

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.68 times more return on investment than Zhuzhou Kibing. However, Citigroup is 1.46 times less risky than Zhuzhou Kibing. It trades about 0.07 of its potential returns per unit of risk. Zhuzhou Kibing Group is currently generating about -0.04 per unit of risk. If you would invest  4,219  in Citigroup on September 24, 2024 and sell it today you would earn a total of  2,700  from holding Citigroup or generate 64.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.18%
Values	Daily Returns

Citigroup  vs.  Zhuzhou Kibing Group

Citigroup

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Zhuzhou Kibing Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zhuzhou Kibing Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhuzhou Kibing sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Zhuzhou Kibing

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

The idea behind Citigroup and Zhuzhou Kibing 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.