Correlation Between Citigroup and Power Mech

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

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

Diversification Opportunities for Citigroup and Power Mech

-0.79

Correlation Coefficient

Citigroup  Power Mech

Pay attention - limited upside

The 3 months correlation between Citigroup and Power is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Power Mech Projects in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Mech Projects 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 Power Mech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Mech Projects has no effect on the direction of Citigroup i.e., Citigroup and Power Mech go up and down completely randomly.

Pair Corralation between Citigroup and Power Mech

Taking into account the 90-day investment horizon Citigroup is expected to generate 13.48 times less return on investment than Power Mech. But when comparing it to its historical volatility, Citigroup is 2.07 times less risky than Power Mech. It trades about 0.01 of its potential returns per unit of risk. Power Mech Projects is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  253,630  in Power Mech Projects on September 21, 2024 and sell it today you would earn a total of  11,385  from holding Power Mech Projects or generate 4.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Citigroup  vs.  Power Mech Projects

Citigroup

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Power Mech Projects

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Power Mech Projects has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Citigroup and Power Mech

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

The idea behind Citigroup and Power Mech Projects 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.