Correlation Between Citigroup and Groupe Tera

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

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

Diversification Opportunities for Citigroup and Groupe Tera

0.41

Correlation Coefficient

Citigroup  Groupe Tera

Very weak diversification

The 3 months correlation between Citigroup and Groupe is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Groupe Tera SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupe Tera 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 Groupe Tera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupe Tera SA has no effect on the direction of Citigroup i.e., Citigroup and Groupe Tera go up and down completely randomly.

Pair Corralation between Citigroup and Groupe Tera

Taking into account the 90-day investment horizon Citigroup is expected to generate 44.17 times less return on investment than Groupe Tera. But when comparing it to its historical volatility, Citigroup is 3.46 times less risky than Groupe Tera. It trades about 0.01 of its potential returns per unit of risk. Groupe Tera SA is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  190.00  in Groupe Tera SA on December 29, 2024 and sell it today you would earn a total of  190.00  from holding Groupe Tera SA or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

Citigroup  vs.  Groupe Tera SA

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 1 (%) 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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Groupe Tera SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Groupe Tera SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Groupe Tera reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Groupe Tera

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

The idea behind Citigroup and Groupe Tera 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.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.