Correlation Between Citigroup and Andes Technology

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

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

Diversification Opportunities for Citigroup and Andes Technology

0.35

Correlation Coefficient

Citigroup  Andes Technology

Weak diversification

The 3 months correlation between Citigroup and Andes is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Andes Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andes Technology Corp 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 Andes Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andes Technology Corp has no effect on the direction of Citigroup i.e., Citigroup and Andes Technology go up and down completely randomly.

Pair Corralation between Citigroup and Andes Technology

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.68 times less return on investment than Andes Technology. But when comparing it to its historical volatility, Citigroup is 1.53 times less risky than Andes Technology. It trades about 0.03 of its potential returns per unit of risk. Andes Technology Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  38,500  in Andes Technology Corp on December 4, 2024 and sell it today you would earn a total of  900.00  from holding Andes Technology Corp or generate 2.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.33%
Values	Daily Returns

Citigroup  vs.  Andes Technology Corp

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Andes Technology Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Andes Technology Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Andes Technology 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 Andes Technology

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

The idea behind Citigroup and Andes Technology Corp 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.