Correlation Between Citigroup and AP Moeller

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

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

Diversification Opportunities for Citigroup and AP Moeller

-0.42

Correlation Coefficient

Citigroup  AP Moeller

Very good diversification

The 3 months correlation between Citigroup and AMKBY is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and AP Moeller Maersk AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AP Moeller Maersk 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 AP Moeller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AP Moeller Maersk has no effect on the direction of Citigroup i.e., Citigroup and AP Moeller go up and down completely randomly.

Pair Corralation between Citigroup and AP Moeller

Taking into account the 90-day investment horizon Citigroup is expected to generate 9.07 times less return on investment than AP Moeller. But when comparing it to its historical volatility, Citigroup is 1.3 times less risky than AP Moeller. It trades about 0.01 of its potential returns per unit of risk. AP Moeller Maersk AS is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  755.00  in AP Moeller Maersk AS on December 28, 2024 and sell it today you would earn a total of  115.00  from holding AP Moeller Maersk AS or generate 15.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Citigroup  vs.  AP Moeller Maersk AS

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.

AP Moeller Maersk

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AP Moeller Maersk AS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental drivers, AP Moeller showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and AP Moeller

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

The idea behind Citigroup and AP Moeller Maersk AS 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.