Correlation Between Citigroup and Olympic Circuit

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

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

Diversification Opportunities for Citigroup and Olympic Circuit

0.79

Correlation Coefficient

Citigroup  Olympic Circuit

Poor diversification

The 3 months correlation between Citigroup and Olympic is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Olympic Circuit Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympic Circuit Tech 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 Olympic Circuit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olympic Circuit Tech has no effect on the direction of Citigroup i.e., Citigroup and Olympic Circuit go up and down completely randomly.

Pair Corralation between Citigroup and Olympic Circuit

Taking into account the 90-day investment horizon Citigroup is expected to generate 4.51 times less return on investment than Olympic Circuit. But when comparing it to its historical volatility, Citigroup is 2.61 times less risky than Olympic Circuit. It trades about 0.1 of its potential returns per unit of risk. Olympic Circuit Technology is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,022  in Olympic Circuit Technology on September 20, 2024 and sell it today you would earn a total of  1,056  from holding Olympic Circuit Technology or generate 52.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.75%
Values	Daily Returns

Citigroup  vs.  Olympic Circuit Technology

Citigroup

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Olympic Circuit Tech

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Olympic Circuit Technology are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Olympic Circuit sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Olympic Circuit

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

The idea behind Citigroup and Olympic Circuit Technology 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.