Correlation Between Citigroup and HUTCHISON TELECOMM

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

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

Diversification Opportunities for Citigroup and HUTCHISON TELECOMM

-0.29

Correlation Coefficient

Citigroup  HUTCHISON TELECOMM

Very good diversification

The 3 months correlation between Citigroup and HUTCHISON is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and HUTCHISON TELECOMM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUTCHISON TELECOMM 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 HUTCHISON TELECOMM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUTCHISON TELECOMM has no effect on the direction of Citigroup i.e., Citigroup and HUTCHISON TELECOMM go up and down completely randomly.

Pair Corralation between Citigroup and HUTCHISON TELECOMM

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.35 times more return on investment than HUTCHISON TELECOMM. However, Citigroup is 2.9 times less risky than HUTCHISON TELECOMM. It trades about 0.41 of its potential returns per unit of risk. HUTCHISON TELECOMM is currently generating about -0.01 per unit of risk. If you would invest  6,977  in Citigroup on October 23, 2024 and sell it today you would earn a total of  1,022  from holding Citigroup or generate 14.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.89%
Values	Daily Returns

Citigroup  vs.  HUTCHISON TELECOMM

Citigroup

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 18 (%) 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.

HUTCHISON TELECOMM

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HUTCHISON TELECOMM are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, HUTCHISON TELECOMM may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Citigroup and HUTCHISON TELECOMM

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

The idea behind Citigroup and HUTCHISON TELECOMM 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.