Correlation Between Citigroup and Tanke Biosciences

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

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

Diversification Opportunities for Citigroup and Tanke Biosciences

-0.11

Correlation Coefficient

Citigroup  Tanke Biosciences

Good diversification

The 3 months correlation between Citigroup and Tanke is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Tanke Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tanke Biosciences 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 Tanke Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tanke Biosciences has no effect on the direction of Citigroup i.e., Citigroup and Tanke Biosciences go up and down completely randomly.

Pair Corralation between Citigroup and Tanke Biosciences

Taking into account the 90-day investment horizon Citigroup is expected to generate 12.01 times less return on investment than Tanke Biosciences. But when comparing it to its historical volatility, Citigroup is 27.57 times less risky than Tanke Biosciences. It trades about 0.21 of its potential returns per unit of risk. Tanke Biosciences is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Tanke Biosciences on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Tanke Biosciences or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Citigroup  vs.  Tanke Biosciences

Citigroup

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 16 (%) 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.

Tanke Biosciences

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tanke Biosciences are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent fundamental drivers, Tanke Biosciences demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Tanke Biosciences

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

The idea behind Citigroup and Tanke Biosciences 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.