Correlation Between Citigroup and CD Projekt

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

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

Diversification Opportunities for Citigroup and CD Projekt

-0.16

Correlation Coefficient

Citigroup  CD Projekt

Good diversification

The 3 months correlation between Citigroup and OTGLF is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and CD Projekt SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CD Projekt SA 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 CD Projekt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CD Projekt SA has no effect on the direction of Citigroup i.e., Citigroup and CD Projekt go up and down completely randomly.

Pair Corralation between Citigroup and CD Projekt

Taking into account the 90-day investment horizon Citigroup is expected to generate 16.83 times more return on investment than CD Projekt. However, Citigroup is 16.83 times more volatile than CD Projekt SA. It trades about 0.42 of its potential returns per unit of risk. CD Projekt SA is currently generating about 0.0 per unit of risk. If you would invest  6,919  in Citigroup on October 21, 2024 and sell it today you would earn a total of  1,080  from holding Citigroup or generate 15.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Citigroup  vs.  CD Projekt SA

Citigroup

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 19 (%) 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.

CD Projekt SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CD Projekt SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, CD Projekt 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 CD Projekt

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

The idea behind Citigroup and CD Projekt SA 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.