Correlation Between Citigroup and SSI Securities

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

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

Diversification Opportunities for Citigroup and SSI Securities

-0.74

Correlation Coefficient

Citigroup  SSI Securities

Pay attention - limited upside

The 3 months correlation between Citigroup and SSI is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and SSI Securities Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSI Securities 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 SSI Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSI Securities Corp has no effect on the direction of Citigroup i.e., Citigroup and SSI Securities go up and down completely randomly.

Pair Corralation between Citigroup and SSI Securities

Taking into account the 90-day investment horizon Citigroup is expected to generate 12.87 times less return on investment than SSI Securities. But when comparing it to its historical volatility, Citigroup is 1.37 times less risky than SSI Securities. It trades about 0.02 of its potential returns per unit of risk. SSI Securities Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2,460,000  in SSI Securities Corp on September 22, 2024 and sell it today you would earn a total of  165,000  from holding SSI Securities Corp or generate 6.71% return on investment over 90 days.

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

Citigroup  vs.  SSI Securities Corp

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.

SSI Securities Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SSI Securities Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, SSI Securities is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and SSI Securities

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

The idea behind Citigroup and SSI Securities 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.