Correlation Between Citigroup and CN DATANG

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

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

Diversification Opportunities for Citigroup and CN DATANG

0.04

Correlation Coefficient

Citigroup  CN DATANG

Significant diversification

The 3 months correlation between Citigroup and DT7 is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and CN DATANG C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CN DATANG C 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 CN DATANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CN DATANG C has no effect on the direction of Citigroup i.e., Citigroup and CN DATANG go up and down completely randomly.

Pair Corralation between Citigroup and CN DATANG

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.51 times less return on investment than CN DATANG. But when comparing it to its historical volatility, Citigroup is 1.77 times less risky than CN DATANG. It trades about 0.04 of its potential returns per unit of risk. CN DATANG C is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  24.00  in CN DATANG C on December 20, 2024 and sell it today you would earn a total of  1.00  from holding CN DATANG C or generate 4.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  CN DATANG C

Citigroup

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 3 (%) 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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

CN DATANG C

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CN DATANG C are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, CN DATANG may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Citigroup and CN DATANG

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

The idea behind Citigroup and CN DATANG C 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.