Correlation Between Citigroup and Kongsberg Gruppen

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

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

Diversification Opportunities for Citigroup and Kongsberg Gruppen

0.29

Correlation Coefficient

Citigroup  Kongsberg Gruppen

Modest diversification

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

Pair Corralation between Citigroup and Kongsberg Gruppen

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.12 times more return on investment than Kongsberg Gruppen. However, Citigroup is 1.12 times more volatile than Kongsberg Gruppen ASA. It trades about 0.42 of its potential returns per unit of risk. Kongsberg Gruppen ASA is currently generating about -0.21 per unit of risk. If you would invest  7,100  in Citigroup on October 25, 2024 and sell it today you would earn a total of  1,069  from holding Citigroup or generate 15.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.0%
Values	Daily Returns

Citigroup  vs.  Kongsberg Gruppen ASA

Citigroup

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 21 (%) 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.

Kongsberg Gruppen ASA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kongsberg Gruppen ASA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Kongsberg Gruppen is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Citigroup and Kongsberg Gruppen

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

The idea behind Citigroup and Kongsberg Gruppen ASA 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.