Correlation Between Citigroup and COSCO SHIPPING

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

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

Diversification Opportunities for Citigroup and COSCO SHIPPING

0.15

Correlation Coefficient

Citigroup  COSCO SHIPPING

Average diversification

The 3 months correlation between Citigroup and COSCO is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and COSCO SHIPPING Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSCO SHIPPING Energy 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 COSCO SHIPPING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSCO SHIPPING Energy has no effect on the direction of Citigroup i.e., Citigroup and COSCO SHIPPING go up and down completely randomly.

Pair Corralation between Citigroup and COSCO SHIPPING

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.52 times more return on investment than COSCO SHIPPING. However, Citigroup is 1.92 times less risky than COSCO SHIPPING. It trades about 0.08 of its potential returns per unit of risk. COSCO SHIPPING Energy is currently generating about -0.07 per unit of risk. If you would invest  6,975  in Citigroup on September 27, 2024 and sell it today you would earn a total of  125.00  from holding Citigroup or generate 1.79% return on investment over 90 days.

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

Citigroup  vs.  COSCO SHIPPING Energy

Citigroup

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

COSCO SHIPPING Energy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in COSCO SHIPPING Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, COSCO SHIPPING may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Citigroup and COSCO SHIPPING

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

The idea behind Citigroup and COSCO SHIPPING Energy 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.