Correlation Between Citigroup and San Neng

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

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

Diversification Opportunities for Citigroup and San Neng

-0.57

Correlation Coefficient

Citigroup  San Neng

Excellent diversification

The 3 months correlation between Citigroup and San is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and San Neng Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Neng Group 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 San Neng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of San Neng Group has no effect on the direction of Citigroup i.e., Citigroup and San Neng go up and down completely randomly.

Pair Corralation between Citigroup and San Neng

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.17 times more return on investment than San Neng. However, Citigroup is 1.17 times more volatile than San Neng Group. It trades about 0.19 of its potential returns per unit of risk. San Neng Group is currently generating about 0.02 per unit of risk. If you would invest  6,900  in Citigroup on September 17, 2024 and sell it today you would earn a total of  201.00  from holding Citigroup or generate 2.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Citigroup  vs.  San Neng Group

Citigroup

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

San Neng Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in San Neng Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, San Neng 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 San Neng

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

The idea behind Citigroup and San Neng Group 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.