Correlation Between Citigroup and Kairous Acquisition

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

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

Diversification Opportunities for Citigroup and Kairous Acquisition

0.19

Correlation Coefficient

Citigroup  Kairous Acquisition

Average diversification

The 3 months correlation between Citigroup and Kairous is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Kairous Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kairous Acquisition Corp 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 Kairous Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kairous Acquisition Corp has no effect on the direction of Citigroup i.e., Citigroup and Kairous Acquisition go up and down completely randomly.

Pair Corralation between Citigroup and Kairous Acquisition

Taking into account the 90-day investment horizon Citigroup is expected to generate 442.74 times less return on investment than Kairous Acquisition. But when comparing it to its historical volatility, Citigroup is 119.56 times less risky than Kairous Acquisition. It trades about 0.05 of its potential returns per unit of risk. Kairous Acquisition Corp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Kairous Acquisition Corp on September 24, 2024 and sell it today you would lose (2.99) from holding Kairous Acquisition Corp or give up 29.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	53.01%
Values	Daily Returns

Citigroup  vs.  Kairous Acquisition Corp

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

Kairous Acquisition Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kairous Acquisition Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal essential indicators, Kairous Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Kairous Acquisition

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

The idea behind Citigroup and Kairous Acquisition Corp 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.