Correlation Between Citigroup and Da Li

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

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

Diversification Opportunities for Citigroup and Da Li

-0.59

Correlation Coefficient

Citigroup  Da Li

Excellent diversification

The 3 months correlation between Citigroup and 6177 is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Da Li Development Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Da Li Development 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 Da Li. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Da Li Development has no effect on the direction of Citigroup i.e., Citigroup and Da Li go up and down completely randomly.

Pair Corralation between Citigroup and Da Li

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.72 times more return on investment than Da Li. However, Citigroup is 1.38 times less risky than Da Li. It trades about 0.02 of its potential returns per unit of risk. Da Li Development Co is currently generating about -0.12 per unit of risk. If you would invest  7,075  in Citigroup on September 26, 2024 and sell it today you would earn a total of  25.00  from holding Citigroup or generate 0.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Citigroup  vs.  Da Li Development Co

Citigroup

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) 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.

Da Li Development

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Da Li Development Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Citigroup and Da Li

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

The idea behind Citigroup and Da Li Development Co 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.