Correlation Between Citigroup and Pampa Energa

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

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

Diversification Opportunities for Citigroup and Pampa Energa

0.92

Correlation Coefficient

Citigroup  Pampa Energa

Almost no diversification

The 3 months correlation between Citigroup and Pampa is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Pampa Energa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pampa Energa SA 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 Pampa Energa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pampa Energa SA has no effect on the direction of Citigroup i.e., Citigroup and Pampa Energa go up and down completely randomly.

Pair Corralation between Citigroup and Pampa Energa

Taking into account the 90-day investment horizon Citigroup is expected to generate 4.59 times less return on investment than Pampa Energa. But when comparing it to its historical volatility, Citigroup is 3.0 times less risky than Pampa Energa. It trades about 0.25 of its potential returns per unit of risk. Pampa Energa SA is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  7,000  in Pampa Energa SA on September 15, 2024 and sell it today you would earn a total of  1,500  from holding Pampa Energa SA or generate 21.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

Citigroup  vs.  Pampa Energa SA

Citigroup

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pampa Energa SA

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pampa Energa SA are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Pampa Energa reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Pampa Energa

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

The idea behind Citigroup and Pampa Energa SA 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.