Correlation Between Citigroup and Ningbo Fujia

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

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

Diversification Opportunities for Citigroup and Ningbo Fujia

0.51

Correlation Coefficient

Citigroup  Ningbo Fujia

Very weak diversification

The 3 months correlation between Citigroup and Ningbo is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Ningbo Fujia Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Fujia Industrial 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 Ningbo Fujia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Fujia Industrial has no effect on the direction of Citigroup i.e., Citigroup and Ningbo Fujia go up and down completely randomly.

Pair Corralation between Citigroup and Ningbo Fujia

Taking into account the 90-day investment horizon Citigroup is expected to generate 14.74 times less return on investment than Ningbo Fujia. But when comparing it to its historical volatility, Citigroup is 2.9 times less risky than Ningbo Fujia. It trades about 0.04 of its potential returns per unit of risk. Ningbo Fujia Industrial is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,268  in Ningbo Fujia Industrial on September 28, 2024 and sell it today you would earn a total of  200.00  from holding Ningbo Fujia Industrial or generate 15.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	91.3%
Values	Daily Returns

Citigroup  vs.  Ningbo Fujia Industrial

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.

Ningbo Fujia Industrial

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ningbo Fujia Industrial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Ningbo Fujia 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 Ningbo Fujia

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

The idea behind Citigroup and Ningbo Fujia Industrial 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.