Correlation Between Citigroup and Utime

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

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

Diversification Opportunities for Citigroup and Utime

0.53

Correlation Coefficient

Citigroup  Utime

Very weak diversification

The 3 months correlation between Citigroup and Utime is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Utime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Utime 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 Utime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Utime has no effect on the direction of Citigroup i.e., Citigroup and Utime go up and down completely randomly.

Pair Corralation between Citigroup and Utime

Taking into account the 90-day investment horizon Citigroup is expected to generate 9.94 times less return on investment than Utime. But when comparing it to its historical volatility, Citigroup is 13.75 times less risky than Utime. It trades about 0.06 of its potential returns per unit of risk. Utime is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  106.00  in Utime on October 11, 2024 and sell it today you would lose (51.00) from holding Utime or give up 48.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	25.81%
Values	Daily Returns

Citigroup  vs.  Utime

Citigroup

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Utime

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Utime has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Utime is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Citigroup and Utime

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

The idea behind Citigroup and Utime 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.