Correlation Between Citigroup and OCUP Old

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

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

Diversification Opportunities for Citigroup and OCUP Old

-0.7

Correlation Coefficient

Citigroup  OCUP Old

Excellent diversification

The 3 months correlation between Citigroup and OCUP is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and OCUP Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OCUP Old 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 OCUP Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OCUP Old has no effect on the direction of Citigroup i.e., Citigroup and OCUP Old go up and down completely randomly.

Pair Corralation between Citigroup and OCUP Old

If you would invest  6,977  in Citigroup on October 24, 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	Weak
Accuracy	5.56%
Values	Daily Returns

Citigroup  vs.  OCUP Old

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.

OCUP Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OCUP Old has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, OCUP Old is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Citigroup and OCUP Old

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

The idea behind Citigroup and OCUP Old 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.