Correlation Between Citigroup and ECS Botanics

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

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

Diversification Opportunities for Citigroup and ECS Botanics

-0.36

Correlation Coefficient

Citigroup  ECS Botanics

Very good diversification

The 3 months correlation between Citigroup and ECS is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and ECS Botanics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECS Botanics Holdings 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 ECS Botanics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECS Botanics Holdings has no effect on the direction of Citigroup i.e., Citigroup and ECS Botanics go up and down completely randomly.

Pair Corralation between Citigroup and ECS Botanics

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.39 times more return on investment than ECS Botanics. However, Citigroup is 2.59 times less risky than ECS Botanics. It trades about 0.13 of its potential returns per unit of risk. ECS Botanics Holdings is currently generating about 0.0 per unit of risk. If you would invest  6,205  in Citigroup on October 7, 2024 and sell it today you would earn a total of  895.00  from holding Citigroup or generate 14.42% return on investment over 90 days.

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

Citigroup  vs.  ECS Botanics Holdings

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 unsteady fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

ECS Botanics Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ECS Botanics Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ECS Botanics is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Citigroup and ECS Botanics

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

The idea behind Citigroup and ECS Botanics Holdings 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 CEOs Directory module to screen CEOs from public companies around the world.