Correlation Between Citigroup and Perception Capital

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

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

Diversification Opportunities for Citigroup and Perception Capital

0.63

Correlation Coefficient

Citigroup  Perception Capital

Poor diversification

The 3 months correlation between Citigroup and Perception is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Perception Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perception Capital Corp 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 Perception Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perception Capital Corp has no effect on the direction of Citigroup i.e., Citigroup and Perception Capital go up and down completely randomly.

Pair Corralation between Citigroup and Perception Capital

If you would invest  5,788  in Citigroup on September 16, 2024 and sell it today you would earn a total of  1,313  from holding Citigroup or generate 22.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.54%
Values	Daily Returns

Citigroup  vs.  Perception Capital Corp

Citigroup

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 13 (%) 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.

Perception Capital Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perception Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Perception Capital is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Citigroup and Perception Capital

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

The idea behind Citigroup and Perception Capital Corp 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.