Correlation Between Citigroup and BINHO

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

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

Diversification Opportunities for Citigroup and BINHO

0.31

Correlation Coefficient

Citigroup  BINHO

Weak diversification

The 3 months correlation between Citigroup and BINHO is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and BINHO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BINHO 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 BINHO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BINHO has no effect on the direction of Citigroup i.e., Citigroup and BINHO go up and down completely randomly.

Pair Corralation between Citigroup and BINHO

Taking into account the 90-day investment horizon Citigroup is expected to generate 3.37 times less return on investment than BINHO. But when comparing it to its historical volatility, Citigroup is 2.73 times less risky than BINHO. It trades about 0.07 of its potential returns per unit of risk. BINHO is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  12,500  in BINHO on October 22, 2024 and sell it today you would earn a total of  17,000  from holding BINHO or generate 136.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	59.48%
Values	Daily Returns

Citigroup  vs.  BINHO

Citigroup

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 17 (%) 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.

BINHO

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BINHO are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, BINHO is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Citigroup and BINHO

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

The idea behind Citigroup and BINHO 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.