Correlation Between Citigroup and TianJin 712

Can any of the company-specific risk be diversified away by investing in both Citigroup and TianJin 712 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 TianJin 712 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and TianJin 712 Communication, you can compare the effects of market volatilities on Citigroup and TianJin 712 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 TianJin 712. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and TianJin 712.

Diversification Opportunities for Citigroup and TianJin 712

0.68

Correlation Coefficient

Citigroup  TianJin 712

Poor diversification

The 3 months correlation between Citigroup and TianJin is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and TianJin 712 Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TianJin 712 Communication 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 TianJin 712. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TianJin 712 Communication has no effect on the direction of Citigroup i.e., Citigroup and TianJin 712 go up and down completely randomly.

Pair Corralation between Citigroup and TianJin 712

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.43 times more return on investment than TianJin 712. However, Citigroup is 2.3 times less risky than TianJin 712. It trades about 0.22 of its potential returns per unit of risk. TianJin 712 Communication is currently generating about 0.05 per unit of risk. If you would invest  6,129  in Citigroup on September 19, 2024 and sell it today you would earn a total of  988.50  from holding Citigroup or generate 16.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  TianJin 712 Communication

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.

TianJin 712 Communication

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TianJin 712 Communication are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, TianJin 712 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and TianJin 712

The main advantage of trading using opposite Citigroup and TianJin 712 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, TianJin 712 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 TianJin 712 will offset losses from the drop in TianJin 712's long position.

The idea behind Citigroup and TianJin 712 Communication 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.