Correlation Between Citigroup and Tacheng Real

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

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

Diversification Opportunities for Citigroup and Tacheng Real

0.43

Correlation Coefficient

Citigroup  Tacheng Real

Very weak diversification

The 3 months correlation between Citigroup and Tacheng is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Tacheng Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tacheng Real Estate 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 Tacheng Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tacheng Real Estate has no effect on the direction of Citigroup i.e., Citigroup and Tacheng Real go up and down completely randomly.

Pair Corralation between Citigroup and Tacheng Real

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.81 times less return on investment than Tacheng Real. But when comparing it to its historical volatility, Citigroup is 1.87 times less risky than Tacheng Real. It trades about 0.05 of its potential returns per unit of risk. Tacheng Real Estate is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,330  in Tacheng Real Estate on September 20, 2024 and sell it today you would earn a total of  770.00  from holding Tacheng Real Estate or generate 23.12% return on investment over 90 days.

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

Citigroup  vs.  Tacheng Real Estate

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.

Tacheng Real Estate

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tacheng Real Estate are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Tacheng Real is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Citigroup and Tacheng Real

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

The idea behind Citigroup and Tacheng Real Estate 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.