Correlation Between Citigroup and Ensurge Micropower

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

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

Diversification Opportunities for Citigroup and Ensurge Micropower

-0.56

Correlation Coefficient

Citigroup  Ensurge Micropower

Excellent diversification

The 3 months correlation between Citigroup and Ensurge is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Ensurge Micropower ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ensurge Micropower ASA 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 Ensurge Micropower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ensurge Micropower ASA has no effect on the direction of Citigroup i.e., Citigroup and Ensurge Micropower go up and down completely randomly.

Pair Corralation between Citigroup and Ensurge Micropower

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.2 times more return on investment than Ensurge Micropower. However, Citigroup is 5.03 times less risky than Ensurge Micropower. It trades about 0.08 of its potential returns per unit of risk. Ensurge Micropower ASA is currently generating about -0.02 per unit of risk. If you would invest  4,079  in Citigroup on September 13, 2024 and sell it today you would earn a total of  3,117  from holding Citigroup or generate 76.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Citigroup  vs.  Ensurge Micropower ASA

Citigroup

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Ensurge Micropower ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ensurge Micropower ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Citigroup and Ensurge Micropower

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

The idea behind Citigroup and Ensurge Micropower ASA 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.