Correlation Between Citigroup and Idsud SA

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

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

Diversification Opportunities for Citigroup and Idsud SA

0.77

Correlation Coefficient

Citigroup  Idsud SA

Poor diversification

The 3 months correlation between Citigroup and Idsud is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Idsud SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Idsud 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 Idsud SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Idsud SA has no effect on the direction of Citigroup i.e., Citigroup and Idsud SA go up and down completely randomly.

Pair Corralation between Citigroup and Idsud SA

Taking into account the 90-day investment horizon Citigroup is expected to generate 3.61 times more return on investment than Idsud SA. However, Citigroup is 3.61 times more volatile than Idsud SA. It trades about 0.13 of its potential returns per unit of risk. Idsud SA is currently generating about 0.08 per unit of risk. If you would invest  7,090  in Citigroup on December 1, 2024 and sell it today you would earn a total of  905.00  from holding Citigroup or generate 12.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.77%
Values	Daily Returns

Citigroup  vs.  Idsud SA

Citigroup

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) 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.

Idsud SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Idsud SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Idsud SA is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Citigroup and Idsud SA

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

The idea behind Citigroup and Idsud 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.