Correlation Between Citigroup and Lontium Semiconductor

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

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

Diversification Opportunities for Citigroup and Lontium Semiconductor

0.33

Correlation Coefficient

Citigroup  Lontium Semiconductor

Weak diversification

The 3 months correlation between Citigroup and Lontium is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Lontium Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lontium Semiconductor 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 Lontium Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lontium Semiconductor has no effect on the direction of Citigroup i.e., Citigroup and Lontium Semiconductor go up and down completely randomly.

Pair Corralation between Citigroup and Lontium Semiconductor

Taking into account the 90-day investment horizon Citigroup is expected to generate 10.71 times less return on investment than Lontium Semiconductor. But when comparing it to its historical volatility, Citigroup is 2.56 times less risky than Lontium Semiconductor. It trades about 0.03 of its potential returns per unit of risk. Lontium Semiconductor Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  7,676  in Lontium Semiconductor Corp on December 24, 2024 and sell it today you would earn a total of  2,284  from holding Lontium Semiconductor Corp or generate 29.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.67%
Values	Daily Returns

Citigroup  vs.  Lontium Semiconductor Corp

Citigroup

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Lontium Semiconductor

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lontium Semiconductor Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lontium Semiconductor sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Lontium Semiconductor

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

The idea behind Citigroup and Lontium Semiconductor 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.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.