Correlation Between Citigroup and Semirara Mining

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

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

Diversification Opportunities for Citigroup and Semirara Mining

0.57

Correlation Coefficient

Citigroup  Semirara Mining

Very weak diversification

The 3 months correlation between Citigroup and Semirara is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Semirara Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semirara Mining 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 Semirara Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semirara Mining Corp has no effect on the direction of Citigroup i.e., Citigroup and Semirara Mining go up and down completely randomly.

Pair Corralation between Citigroup and Semirara Mining

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.81 times more return on investment than Semirara Mining. However, Citigroup is 1.81 times more volatile than Semirara Mining Corp. It trades about 0.13 of its potential returns per unit of risk. Semirara Mining Corp is currently generating about 0.04 per unit of risk. If you would invest  6,092  in Citigroup on September 2, 2024 and sell it today you would earn a total of  995.00  from holding Citigroup or generate 16.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Citigroup  vs.  Semirara Mining Corp

Citigroup

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) 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.

Semirara Mining Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Semirara Mining Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Semirara Mining is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Citigroup and Semirara Mining

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

The idea behind Citigroup and Semirara Mining 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.

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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.