Correlation Between Citigroup and Xiamen Amoytop

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

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

Diversification Opportunities for Citigroup and Xiamen Amoytop

-0.82

Correlation Coefficient

Citigroup  Xiamen Amoytop

Pay attention - limited upside

The 3 months correlation between Citigroup and Xiamen is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Xiamen Amoytop Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiamen Amoytop Biotech 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 Xiamen Amoytop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiamen Amoytop Biotech has no effect on the direction of Citigroup i.e., Citigroup and Xiamen Amoytop go up and down completely randomly.

Pair Corralation between Citigroup and Xiamen Amoytop

Taking into account the 90-day investment horizon Citigroup is expected to generate 3.24 times less return on investment than Xiamen Amoytop. But when comparing it to its historical volatility, Citigroup is 1.26 times less risky than Xiamen Amoytop. It trades about 0.05 of its potential returns per unit of risk. Xiamen Amoytop Biotech is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  7,030  in Xiamen Amoytop Biotech on October 8, 2024 and sell it today you would earn a total of  321.00  from holding Xiamen Amoytop Biotech or generate 4.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Citigroup  vs.  Xiamen Amoytop Biotech

Citigroup

Risk-Adjusted Performance

10 of 100

OK

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

Xiamen Amoytop Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xiamen Amoytop Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Citigroup and Xiamen Amoytop

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

The idea behind Citigroup and Xiamen Amoytop Biotech 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.