Correlation Between Citigroup and Den Networks

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

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

Diversification Opportunities for Citigroup and Den Networks

-0.16

Correlation Coefficient

Citigroup  Den Networks

Good diversification

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

Pair Corralation between Citigroup and Den Networks

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.68 times more return on investment than Den Networks. However, Citigroup is 1.47 times less risky than Den Networks. It trades about 0.05 of its potential returns per unit of risk. Den Networks Limited is currently generating about -0.15 per unit of risk. If you would invest  6,795  in Citigroup on December 19, 2024 and sell it today you would earn a total of  349.00  from holding Citigroup or generate 5.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Citigroup  vs.  Den Networks Limited

Citigroup

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Den Networks Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Den Networks Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Citigroup and Den Networks

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

The idea behind Citigroup and Den Networks Limited 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.