Correlation Between Citigroup and TechnoPro Holdings

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

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

Diversification Opportunities for Citigroup and TechnoPro Holdings

-0.12

Correlation Coefficient

Citigroup  TechnoPro Holdings

Good diversification

The 3 months correlation between Citigroup and TechnoPro is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and TechnoPro Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TechnoPro Holdings 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 TechnoPro Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TechnoPro Holdings has no effect on the direction of Citigroup i.e., Citigroup and TechnoPro Holdings go up and down completely randomly.

Pair Corralation between Citigroup and TechnoPro Holdings

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.82 times more return on investment than TechnoPro Holdings. However, Citigroup is 1.22 times less risky than TechnoPro Holdings. It trades about 0.09 of its potential returns per unit of risk. TechnoPro Holdings is currently generating about -0.03 per unit of risk. If you would invest  5,248  in Citigroup on October 7, 2024 and sell it today you would earn a total of  1,852  from holding Citigroup or generate 35.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  TechnoPro Holdings

Citigroup

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

TechnoPro Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TechnoPro Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, TechnoPro Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and TechnoPro Holdings

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

The idea behind Citigroup and TechnoPro Holdings 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .