Correlation Between Citigroup and Hefei Metalforming

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

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

Diversification Opportunities for Citigroup and Hefei Metalforming

-0.3

Correlation Coefficient

Citigroup  Hefei Metalforming

Very good diversification

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

Pair Corralation between Citigroup and Hefei Metalforming

Taking into account the 90-day investment horizon Citigroup is expected to generate 39.03 times less return on investment than Hefei Metalforming. But when comparing it to its historical volatility, Citigroup is 1.91 times less risky than Hefei Metalforming. It trades about 0.01 of its potential returns per unit of risk. Hefei Metalforming Mach is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  710.00  in Hefei Metalforming Mach on December 30, 2024 and sell it today you would earn a total of  627.00  from holding Hefei Metalforming Mach or generate 88.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Citigroup  vs.  Hefei Metalforming Mach

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 1 (%) 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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Hefei Metalforming Mach

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hefei Metalforming Mach are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hefei Metalforming sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Hefei Metalforming

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

The idea behind Citigroup and Hefei Metalforming Mach 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.