Correlation Between Citigroup and Shikun Binui

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

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

Diversification Opportunities for Citigroup and Shikun Binui

0.07

Correlation Coefficient

Citigroup  Shikun Binui

Significant diversification

The 3 months correlation between Citigroup and Shikun is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Shikun Binui in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shikun Binui 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 Shikun Binui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shikun Binui has no effect on the direction of Citigroup i.e., Citigroup and Shikun Binui go up and down completely randomly.

Pair Corralation between Citigroup and Shikun Binui

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.64 times more return on investment than Shikun Binui. However, Citigroup is 1.56 times less risky than Shikun Binui. It trades about 0.01 of its potential returns per unit of risk. Shikun Binui is currently generating about -0.19 per unit of risk. If you would invest  6,991  in Citigroup on December 29, 2024 and sell it today you would earn a total of  42.00  from holding Citigroup or generate 0.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	85.25%
Values	Daily Returns

Citigroup  vs.  Shikun Binui

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Shikun Binui

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shikun Binui has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Citigroup and Shikun Binui

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

The idea behind Citigroup and Shikun Binui 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.