Correlation Between Citigroup and H World

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

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

Diversification Opportunities for Citigroup and H World

-0.49

Correlation Coefficient

Citigroup  H World

Very good diversification

The 3 months correlation between Citigroup and CL4A is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and H World Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H World Group 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 H World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H World Group has no effect on the direction of Citigroup i.e., Citigroup and H World go up and down completely randomly.

Pair Corralation between Citigroup and H World

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.6 times more return on investment than H World. However, Citigroup is 1.67 times less risky than H World. It trades about 0.08 of its potential returns per unit of risk. H World Group is currently generating about 0.03 per unit of risk. If you would invest  5,305  in Citigroup on October 2, 2024 and sell it today you would earn a total of  1,734  from holding Citigroup or generate 32.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.57%
Values	Daily Returns

Citigroup  vs.  H World Group

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.

H World Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days H World Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Citigroup and H World

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

The idea behind Citigroup and H World Group 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.