Correlation Between Citigroup and BOOM LOGISTICS

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

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

Diversification Opportunities for Citigroup and BOOM LOGISTICS

0.1

Correlation Coefficient

Citigroup  BOOM LOGISTICS

Average diversification

The 3 months correlation between Citigroup and BOOM is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and BOOM LOGISTICS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOOM LOGISTICS LTD 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 BOOM LOGISTICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOOM LOGISTICS LTD has no effect on the direction of Citigroup i.e., Citigroup and BOOM LOGISTICS go up and down completely randomly.

Pair Corralation between Citigroup and BOOM LOGISTICS

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.37 times more return on investment than BOOM LOGISTICS. However, Citigroup is 2.73 times less risky than BOOM LOGISTICS. It trades about 0.22 of its potential returns per unit of risk. BOOM LOGISTICS LTD is currently generating about 0.04 per unit of risk. If you would invest  6,129  in Citigroup on September 19, 2024 and sell it today you would earn a total of  988.50  from holding Citigroup or generate 16.13% return on investment over 90 days.

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

Citigroup  vs.  BOOM LOGISTICS LTD

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

BOOM LOGISTICS LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BOOM LOGISTICS LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BOOM LOGISTICS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Citigroup and BOOM LOGISTICS

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

The idea behind Citigroup and BOOM LOGISTICS LTD 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.