Correlation Between Citigroup and Kardemir Karabuk

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

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

Diversification Opportunities for Citigroup and Kardemir Karabuk

0.86

Correlation Coefficient

Citigroup  Kardemir Karabuk

Very poor diversification

The 3 months correlation between Citigroup and Kardemir is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Kardemir Karabuk Demir in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kardemir Karabuk Demir 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 Kardemir Karabuk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kardemir Karabuk Demir has no effect on the direction of Citigroup i.e., Citigroup and Kardemir Karabuk go up and down completely randomly.

Pair Corralation between Citigroup and Kardemir Karabuk

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Kardemir Karabuk. But the stock apears to be less risky and, when comparing its historical volatility, Citigroup is 2.48 times less risky than Kardemir Karabuk. The stock trades about -0.09 of its potential returns per unit of risk. The Kardemir Karabuk Demir is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,656  in Kardemir Karabuk Demir on September 24, 2024 and sell it today you would earn a total of  184.00  from holding Kardemir Karabuk Demir or generate 6.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.24%
Values	Daily Returns

Citigroup  vs.  Kardemir Karabuk Demir

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.

Kardemir Karabuk Demir

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kardemir Karabuk Demir are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Kardemir Karabuk demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Kardemir Karabuk

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

The idea behind Citigroup and Kardemir Karabuk Demir 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.