Correlation Between Citigroup and AppTech Payments

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

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

Diversification Opportunities for Citigroup and AppTech Payments

0.48

Correlation Coefficient

Citigroup  AppTech Payments

Very weak diversification

The 3 months correlation between Citigroup and AppTech is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and AppTech Payments Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AppTech Payments Corp 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 AppTech Payments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AppTech Payments Corp has no effect on the direction of Citigroup i.e., Citigroup and AppTech Payments go up and down completely randomly.

Pair Corralation between Citigroup and AppTech Payments

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the AppTech Payments. But the stock apears to be less risky and, when comparing its historical volatility, Citigroup is 9.05 times less risky than AppTech Payments. The stock trades about -0.04 of its potential returns per unit of risk. The AppTech Payments Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  17.00  in AppTech Payments Corp on December 10, 2024 and sell it today you would earn a total of  1.00  from holding AppTech Payments Corp or generate 5.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Citigroup  vs.  AppTech Payments Corp

Citigroup

Risk-Adjusted Performance

Very Weak

Over the last 90 days Citigroup has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

AppTech Payments Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AppTech Payments Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, AppTech Payments showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and AppTech Payments

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

The idea behind Citigroup and AppTech Payments Corp 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.