Correlation Between Citigroup and China Resources

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

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

Diversification Opportunities for Citigroup and China Resources

-0.29

Correlation Coefficient

Citigroup  China Resources

Very good diversification

The 3 months correlation between Citigroup and China is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and China Resources Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Beer 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 China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Beer has no effect on the direction of Citigroup i.e., Citigroup and China Resources go up and down completely randomly.

Pair Corralation between Citigroup and China Resources

Taking into account the 90-day investment horizon Citigroup is expected to generate 4.68 times less return on investment than China Resources. But when comparing it to its historical volatility, Citigroup is 1.39 times less risky than China Resources. It trades about 0.01 of its potential returns per unit of risk. China Resources Beer is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  310.00  in China Resources Beer on December 28, 2024 and sell it today you would earn a total of  20.00  from holding China Resources Beer or generate 6.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Citigroup  vs.  China Resources Beer

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

China Resources Beer

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China Resources Beer are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, China Resources may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Citigroup and China Resources

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

The idea behind Citigroup and China Resources Beer 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.

Check out your portfolio center.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.