Correlation Between Citigroup and Samsung Electronics

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

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

Diversification Opportunities for Citigroup and Samsung Electronics

0.31

Correlation Coefficient

Citigroup  Samsung Electronics

Weak diversification

The 3 months correlation between Citigroup and Samsung is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics 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 Samsung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Electronics has no effect on the direction of Citigroup i.e., Citigroup and Samsung Electronics go up and down completely randomly.

Pair Corralation between Citigroup and Samsung Electronics

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.86 times less return on investment than Samsung Electronics. But when comparing it to its historical volatility, Citigroup is 1.09 times less risky than Samsung Electronics. It trades about 0.03 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  87,800  in Samsung Electronics Co on December 29, 2024 and sell it today you would earn a total of  9,400  from holding Samsung Electronics Co or generate 10.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Citigroup  vs.  Samsung Electronics Co

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 2 (%) 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.

Samsung Electronics

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Electronics Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Samsung Electronics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Citigroup and Samsung Electronics

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

The idea behind Citigroup and Samsung Electronics Co 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.