Correlation Between Citigroup and Cymabay Therapeu

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

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

Diversification Opportunities for Citigroup and Cymabay Therapeu

-0.16

Correlation Coefficient

Citigroup  Cymabay Therapeu

Good diversification

The 3 months correlation between Citigroup and Cymabay is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Cymabay Therapeu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cymabay Therapeu 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 Cymabay Therapeu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cymabay Therapeu has no effect on the direction of Citigroup i.e., Citigroup and Cymabay Therapeu go up and down completely randomly.

Pair Corralation between Citigroup and Cymabay Therapeu

If you would invest  7,250  in Citigroup on October 11, 2024 and sell it today you would earn a total of  76.00  from holding Citigroup or generate 1.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Citigroup  vs.  Cymabay Therapeu

Citigroup

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Cymabay Therapeu

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Citigroup and Cymabay Therapeu

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

The idea behind Citigroup and Cymabay Therapeu 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.