Correlation Between Citigroup and Guobo Electronics

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

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

Diversification Opportunities for Citigroup and Guobo Electronics

0.41

Correlation Coefficient

Citigroup  Guobo Electronics

Very weak diversification

The 3 months correlation between Citigroup and Guobo is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Guobo Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guobo Electronics 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 Guobo Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guobo Electronics has no effect on the direction of Citigroup i.e., Citigroup and Guobo Electronics go up and down completely randomly.

Pair Corralation between Citigroup and Guobo Electronics

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.48 times more return on investment than Guobo Electronics. However, Citigroup is 2.1 times less risky than Guobo Electronics. It trades about 0.06 of its potential returns per unit of risk. Guobo Electronics Co is currently generating about -0.15 per unit of risk. If you would invest  6,828  in Citigroup on September 21, 2024 and sell it today you would earn a total of  91.00  from holding Citigroup or generate 1.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Citigroup  vs.  Guobo Electronics 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.

Guobo Electronics

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guobo Electronics Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guobo Electronics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Guobo Electronics

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

The idea behind Citigroup and Guobo Electronics 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.

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.