Correlation Between Citigroup and Kawasaki Kisen

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

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

Diversification Opportunities for Citigroup and Kawasaki Kisen

-0.19

Correlation Coefficient

Citigroup  Kawasaki Kisen

Good diversification

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

Pair Corralation between Citigroup and Kawasaki Kisen

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.55 times more return on investment than Kawasaki Kisen. However, Citigroup is 1.82 times less risky than Kawasaki Kisen. It trades about 0.12 of its potential returns per unit of risk. Kawasaki Kisen Kaisha is currently generating about 0.03 per unit of risk. If you would invest  3,936  in Citigroup on September 28, 2024 and sell it today you would earn a total of  3,140  from holding Citigroup or generate 79.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.81%
Values	Daily Returns

Citigroup  vs.  Kawasaki Kisen Kaisha

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.

Kawasaki Kisen Kaisha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kawasaki Kisen Kaisha has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Citigroup and Kawasaki Kisen

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

The idea behind Citigroup and Kawasaki Kisen Kaisha 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.