Correlation Between Citigroup and BELIMO Holding

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

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

Diversification Opportunities for Citigroup and BELIMO Holding

-0.38

Correlation Coefficient

Citigroup  BELIMO Holding

Very good diversification

The 3 months correlation between Citigroup and BELIMO is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and BELIMO Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BELIMO Holding AG 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 BELIMO Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BELIMO Holding AG has no effect on the direction of Citigroup i.e., Citigroup and BELIMO Holding go up and down completely randomly.

Pair Corralation between Citigroup and BELIMO Holding

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.12 times less return on investment than BELIMO Holding. But when comparing it to its historical volatility, Citigroup is 1.06 times less risky than BELIMO Holding. It trades about 0.06 of its potential returns per unit of risk. BELIMO Holding AG is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  47,326  in BELIMO Holding AG on October 3, 2024 and sell it today you would earn a total of  20,546  from holding BELIMO Holding AG or generate 43.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	72.73%
Values	Daily Returns

Citigroup  vs.  BELIMO Holding AG

Citigroup

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

BELIMO Holding AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BELIMO Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BELIMO Holding is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Citigroup and BELIMO Holding

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

The idea behind Citigroup and BELIMO Holding AG 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 Transaction History module to view history of all your transactions and understand their impact on performance.