Correlation Between Corporacion Aceros and Citigroup

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

By analyzing existing cross correlation between Corporacion Aceros Arequipa and Citigroup, you can compare the effects of market volatilities on Corporacion Aceros and Citigroup 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 Corporacion Aceros with a short position of Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporacion Aceros and Citigroup.

Diversification Opportunities for Corporacion Aceros and Citigroup

-0.31

Correlation Coefficient

Corporacion Aceros  Citigroup

Very good diversification

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

Pair Corralation between Corporacion Aceros and Citigroup

Assuming the 90 days trading horizon Corporacion Aceros is expected to generate 6.47 times less return on investment than Citigroup. But when comparing it to its historical volatility, Corporacion Aceros Arequipa is 1.8 times less risky than Citigroup. It trades about 0.02 of its potential returns per unit of risk. Citigroup is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  7,104  in Citigroup on December 26, 2024 and sell it today you would earn a total of  304.00  from holding Citigroup or generate 4.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	44.44%
Values	Daily Returns

Corporacion Aceros Arequipa  vs.  Citigroup

Corporacion Aceros

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Corporacion Aceros Arequipa are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, Corporacion Aceros is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Citigroup

Risk-Adjusted Performance

Insignificant

Over the last 90 days Citigroup has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unsteady forward indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Corporacion Aceros and Citigroup

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

The idea behind Corporacion Aceros Arequipa and Citigroup 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.