Correlation Between Citigroup and AddTech Hub

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

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

Diversification Opportunities for Citigroup and AddTech Hub

-0.66

Correlation Coefficient

Citigroup  AddTech Hub

Excellent diversification

The 3 months correlation between Citigroup and AddTech is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and AddTech Hub Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AddTech Hub Public 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 AddTech Hub. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AddTech Hub Public has no effect on the direction of Citigroup i.e., Citigroup and AddTech Hub go up and down completely randomly.

Pair Corralation between Citigroup and AddTech Hub

Taking into account the 90-day investment horizon Citigroup is expected to generate 6.11 times less return on investment than AddTech Hub. But when comparing it to its historical volatility, Citigroup is 1.28 times less risky than AddTech Hub. It trades about 0.02 of its potential returns per unit of risk. AddTech Hub Public is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  453.00  in AddTech Hub Public on September 22, 2024 and sell it today you would earn a total of  13.00  from holding AddTech Hub Public or generate 2.87% return on investment over 90 days.

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

Citigroup  vs.  AddTech Hub Public

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.

AddTech Hub Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AddTech Hub Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, AddTech Hub is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Citigroup and AddTech Hub

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

The idea behind Citigroup and AddTech Hub Public 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 Transaction History module to view history of all your transactions and understand their impact on performance.