Correlation Between Citigroup and AVIC UAS

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

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

Diversification Opportunities for Citigroup and AVIC UAS

0.43

Correlation Coefficient

Citigroup  AVIC UAS

Very weak diversification

The 3 months correlation between Citigroup and AVIC is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and AVIC UAS Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVIC UAS 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 AVIC UAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVIC UAS has no effect on the direction of Citigroup i.e., Citigroup and AVIC UAS go up and down completely randomly.

Pair Corralation between Citigroup and AVIC UAS

Taking into account the 90-day investment horizon Citigroup is expected to generate 4.38 times less return on investment than AVIC UAS. But when comparing it to its historical volatility, Citigroup is 3.11 times less risky than AVIC UAS. It trades about 0.1 of its potential returns per unit of risk. AVIC UAS Co is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,834  in AVIC UAS Co on September 21, 2024 and sell it today you would earn a total of  1,379  from holding AVIC UAS Co or generate 48.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

Citigroup  vs.  AVIC UAS Co

Citigroup

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

AVIC UAS

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AVIC UAS Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, AVIC UAS sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and AVIC UAS

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

The idea behind Citigroup and AVIC UAS 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.