Correlation Between Citigroup and Tachan Securities

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

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

Diversification Opportunities for Citigroup and Tachan Securities

-0.44

Correlation Coefficient

Citigroup  Tachan Securities

Very good diversification

The 3 months correlation between Citigroup and Tachan is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Tachan Securities Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tachan Securities 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 Tachan Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tachan Securities has no effect on the direction of Citigroup i.e., Citigroup and Tachan Securities go up and down completely randomly.

Pair Corralation between Citigroup and Tachan Securities

Taking into account the 90-day investment horizon Citigroup is expected to generate 3.82 times more return on investment than Tachan Securities. However, Citigroup is 3.82 times more volatile than Tachan Securities Co. It trades about 0.04 of its potential returns per unit of risk. Tachan Securities Co is currently generating about -0.08 per unit of risk. If you would invest  6,534  in Citigroup on October 7, 2024 and sell it today you would earn a total of  566.00  from holding Citigroup or generate 8.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.21%
Values	Daily Returns

Citigroup  vs.  Tachan Securities Co

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 unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Tachan Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tachan Securities Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Tachan Securities is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Citigroup and Tachan Securities

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

The idea behind Citigroup and Tachan Securities 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.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.