Correlation Between Citigroup and Good Finance

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Can any of the company-specific risk be diversified away by investing in both Citigroup and Good Finance 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 Good Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Good Finance Securities, you can compare the effects of market volatilities on Citigroup and Good Finance 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 Good Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Good Finance.

Diversification Opportunities for Citigroup and Good Finance

0.01
  Correlation Coefficient

Significant diversification

The 3 months correlation between Citigroup and Good is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Good Finance Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Good Finance Securities 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 Good Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Good Finance Securities has no effect on the direction of Citigroup i.e., Citigroup and Good Finance go up and down completely randomly.

Pair Corralation between Citigroup and Good Finance

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.4 times less return on investment than Good Finance. But when comparing it to its historical volatility, Citigroup is 1.47 times less risky than Good Finance. It trades about 0.1 of its potential returns per unit of risk. Good Finance Securities is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,480  in Good Finance Securities on September 14, 2024 and sell it today you would earn a total of  920.00  from holding Good Finance Securities or generate 62.16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy97.59%
ValuesDaily Returns

Citigroup  vs.  Good Finance Securities

 Performance 
       Timeline  
Citigroup 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 14 (%) 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.
Good Finance Securities 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Good Finance Securities are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Good Finance may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Citigroup and Good Finance Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Citigroup and Good Finance

The main advantage of trading using opposite Citigroup and Good Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Good Finance 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 Good Finance will offset losses from the drop in Good Finance's long position.
The idea behind Citigroup and Good Finance Securities 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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