Correlation Between Citigroup and Appili Therapeutics

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

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

Diversification Opportunities for Citigroup and Appili Therapeutics

0.22

Correlation Coefficient

Citigroup  Appili Therapeutics

Modest diversification

The 3 months correlation between Citigroup and Appili is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Appili Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appili Therapeutics 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 Appili Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Appili Therapeutics has no effect on the direction of Citigroup i.e., Citigroup and Appili Therapeutics go up and down completely randomly.

Pair Corralation between Citigroup and Appili Therapeutics

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.73 times less return on investment than Appili Therapeutics. But when comparing it to its historical volatility, Citigroup is 5.71 times less risky than Appili Therapeutics. It trades about 0.06 of its potential returns per unit of risk. Appili Therapeutics is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  6.00  in Appili Therapeutics on October 11, 2024 and sell it today you would lose (3.00) from holding Appili Therapeutics or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Citigroup  vs.  Appili Therapeutics

Citigroup

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) 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.

Appili Therapeutics

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Appili Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Appili Therapeutics is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Appili Therapeutics

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

The idea behind Citigroup and Appili Therapeutics 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 Commodity Directory module to find actively traded commodities issued by global exchanges.