Correlation Between Citigroup and Hotai Finance

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

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

Diversification Opportunities for Citigroup and Hotai Finance

-0.89

Correlation Coefficient

Citigroup  Hotai Finance

Pay attention - limited upside

The 3 months correlation between Citigroup and Hotai is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Hotai Finance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotai Finance 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 Hotai Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotai Finance Corp has no effect on the direction of Citigroup i.e., Citigroup and Hotai Finance go up and down completely randomly.

Pair Corralation between Citigroup and Hotai Finance

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.51 times more return on investment than Hotai Finance. However, Citigroup is 1.51 times more volatile than Hotai Finance Corp. It trades about 0.06 of its potential returns per unit of risk. Hotai Finance Corp is currently generating about -0.16 per unit of risk. If you would invest  6,350  in Citigroup on September 30, 2024 and sell it today you would earn a total of  750.00  from holding Citigroup or generate 11.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Citigroup  vs.  Hotai Finance Corp

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 uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Hotai Finance Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hotai Finance Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Citigroup and Hotai Finance

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

The idea behind Citigroup and Hotai Finance 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.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.