Correlation Between Citigroup and Allied Healthcare

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

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

Diversification Opportunities for Citigroup and Allied Healthcare

0.0

Correlation Coefficient

Citigroup  Allied Healthcare

Pay attention - limited upside

The 3 months correlation between Citigroup and Allied is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Allied Healthcare Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Healthcare 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 Allied Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Healthcare has no effect on the direction of Citigroup i.e., Citigroup and Allied Healthcare go up and down completely randomly.

Pair Corralation between Citigroup and Allied Healthcare

If you would invest  6,929  in Citigroup on December 21, 2024 and sell it today you would earn a total of  253.00  from holding Citigroup or generate 3.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Citigroup  vs.  Allied Healthcare Products

Citigroup

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 3 (%) 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.

Allied Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Allied Healthcare Products has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Allied Healthcare is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Citigroup and Allied Healthcare

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

The idea behind Citigroup and Allied Healthcare Products 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.