Correlation Between Citigroup and Teo Seng

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

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

Diversification Opportunities for Citigroup and Teo Seng

-0.36

Correlation Coefficient

Citigroup  Teo Seng

Very good diversification

The 3 months correlation between Citigroup and Teo is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Teo Seng Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teo Seng Capital 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 Teo Seng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teo Seng Capital has no effect on the direction of Citigroup i.e., Citigroup and Teo Seng go up and down completely randomly.

Pair Corralation between Citigroup and Teo Seng

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.97 times less return on investment than Teo Seng. But when comparing it to its historical volatility, Citigroup is 1.72 times less risky than Teo Seng. It trades about 0.09 of its potential returns per unit of risk. Teo Seng Capital is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  46.00  in Teo Seng Capital on October 3, 2024 and sell it today you would earn a total of  64.00  from holding Teo Seng Capital or generate 139.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.13%
Values	Daily Returns

Citigroup  vs.  Teo Seng Capital

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

Teo Seng Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teo Seng Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Citigroup and Teo Seng

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

The idea behind Citigroup and Teo Seng Capital 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.