Correlation Between Citigroup and Thye Ming

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

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

Diversification Opportunities for Citigroup and Thye Ming

0.64

Correlation Coefficient

Citigroup  Thye Ming

Poor diversification

The 3 months correlation between Citigroup and Thye is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Thye Ming Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thye Ming Industrial 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 Thye Ming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thye Ming Industrial has no effect on the direction of Citigroup i.e., Citigroup and Thye Ming go up and down completely randomly.

Pair Corralation between Citigroup and Thye Ming

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Thye Ming. In addition to that, Citigroup is 2.5 times more volatile than Thye Ming Industrial. It trades about -0.08 of its total potential returns per unit of risk. Thye Ming Industrial is currently generating about 0.33 per unit of volatility. If you would invest  6,640  in Thye Ming Industrial on December 4, 2024 and sell it today you would earn a total of  320.00  from holding Thye Ming Industrial or generate 4.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Thye Ming Industrial

Citigroup

Risk-Adjusted Performance

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 April 2025.

Thye Ming Industrial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thye Ming Industrial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Thye Ming may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Citigroup and Thye Ming

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

The idea behind Citigroup and Thye Ming Industrial 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.