Correlation Between Citigroup and Beken Corp

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

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

Diversification Opportunities for Citigroup and Beken Corp

0.84

Correlation Coefficient

Citigroup  Beken Corp

Very poor diversification

The 3 months correlation between Citigroup and Beken is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Beken Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beken Corp 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 Beken Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beken Corp has no effect on the direction of Citigroup i.e., Citigroup and Beken Corp go up and down completely randomly.

Pair Corralation between Citigroup and Beken Corp

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.28 times more return on investment than Beken Corp. However, Citigroup is 3.52 times less risky than Beken Corp. It trades about -0.05 of its potential returns per unit of risk. Beken Corp is currently generating about -0.03 per unit of risk. If you would invest  7,142  in Citigroup on October 4, 2024 and sell it today you would lose (103.00) from holding Citigroup or give up 1.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Citigroup  vs.  Beken Corp

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

Beken Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Beken Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Beken Corp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Citigroup and Beken Corp

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

The idea behind Citigroup and Beken Corp 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.