Correlation Between Citigroup and Hulamin

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

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

Diversification Opportunities for Citigroup and Hulamin

-0.66

Correlation Coefficient

Citigroup  Hulamin

Excellent diversification

The 3 months correlation between Citigroup and Hulamin is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Hulamin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hulamin 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 Hulamin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hulamin has no effect on the direction of Citigroup i.e., Citigroup and Hulamin go up and down completely randomly.

Pair Corralation between Citigroup and Hulamin

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.78 times more return on investment than Hulamin. However, Citigroup is 1.28 times less risky than Hulamin. It trades about 0.09 of its potential returns per unit of risk. Hulamin is currently generating about 0.0 per unit of risk. If you would invest  5,896  in Citigroup on September 14, 2024 and sell it today you would earn a total of  1,205  from holding Citigroup or generate 20.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.21%
Values	Daily Returns

Citigroup  vs.  Hulamin

Citigroup

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 13 (%) 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.

Hulamin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hulamin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Citigroup and Hulamin

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

The idea behind Citigroup and Hulamin 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.

Check out your portfolio center.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.