Correlation Between Citigroup and ASTRA INTERNATIONAL

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

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

Diversification Opportunities for Citigroup and ASTRA INTERNATIONAL

-0.18

Correlation Coefficient

Citigroup  ASTRA INTERNATIONAL

Good diversification

The 3 months correlation between Citigroup and ASTRA is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and ASTRA INTERNATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASTRA INTERNATIONAL 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 ASTRA INTERNATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASTRA INTERNATIONAL has no effect on the direction of Citigroup i.e., Citigroup and ASTRA INTERNATIONAL go up and down completely randomly.

Pair Corralation between Citigroup and ASTRA INTERNATIONAL

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.71 times more return on investment than ASTRA INTERNATIONAL. However, Citigroup is 1.4 times less risky than ASTRA INTERNATIONAL. It trades about 0.07 of its potential returns per unit of risk. ASTRA INTERNATIONAL is currently generating about 0.01 per unit of risk. If you would invest  4,381  in Citigroup on September 29, 2024 and sell it today you would earn a total of  2,719  from holding Citigroup or generate 62.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.61%
Values	Daily Returns

Citigroup  vs.  ASTRA INTERNATIONAL

Citigroup

Risk-Adjusted Performance

9 of 100

OK

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 uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

ASTRA INTERNATIONAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASTRA INTERNATIONAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, ASTRA INTERNATIONAL is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Citigroup and ASTRA INTERNATIONAL

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

The idea behind Citigroup and ASTRA INTERNATIONAL 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.