Correlation Between Citigroup and Sanxiang Advanced

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

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

Diversification Opportunities for Citigroup and Sanxiang Advanced

0.55

Correlation Coefficient

Citigroup  Sanxiang Advanced

Very weak diversification

The 3 months correlation between Citigroup and Sanxiang is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Sanxiang Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanxiang Advanced 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 Sanxiang Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanxiang Advanced has no effect on the direction of Citigroup i.e., Citigroup and Sanxiang Advanced go up and down completely randomly.

Pair Corralation between Citigroup and Sanxiang Advanced

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.45 times more return on investment than Sanxiang Advanced. However, Citigroup is 2.21 times less risky than Sanxiang Advanced. It trades about -0.09 of its potential returns per unit of risk. Sanxiang Advanced Materials is currently generating about -0.27 per unit of risk. If you would invest  7,075  in Citigroup on September 24, 2024 and sell it today you would lose (156.00) from holding Citigroup or give up 2.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Citigroup  vs.  Sanxiang Advanced Materials

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.

Sanxiang Advanced

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sanxiang Advanced Materials are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sanxiang Advanced sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Sanxiang Advanced

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

The idea behind Citigroup and Sanxiang Advanced Materials 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.