Correlation Between Citigroup and SCHMID Group

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

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

Diversification Opportunities for Citigroup and SCHMID Group

-0.4

Correlation Coefficient

Citigroup  SCHMID Group

Very good diversification

The 3 months correlation between Citigroup and SCHMID is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and SCHMID Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCHMID Group NV 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 SCHMID Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCHMID Group NV has no effect on the direction of Citigroup i.e., Citigroup and SCHMID Group go up and down completely randomly.

Pair Corralation between Citigroup and SCHMID Group

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.27 times more return on investment than SCHMID Group. However, Citigroup is 3.77 times less risky than SCHMID Group. It trades about 0.07 of its potential returns per unit of risk. SCHMID Group NV is currently generating about -0.08 per unit of risk. If you would invest  4,550  in Citigroup on October 10, 2024 and sell it today you would earn a total of  2,818  from holding Citigroup or generate 61.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	35.35%
Values	Daily Returns

Citigroup  vs.  SCHMID Group NV

Citigroup

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 11 (%) 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.

SCHMID Group NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SCHMID Group NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Citigroup and SCHMID Group

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

The idea behind Citigroup and SCHMID Group NV 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.