Correlation Between Citigroup and Afcon Holdings
Can any of the company-specific risk be diversified away by investing in both Citigroup and Afcon 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 Afcon Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Afcon Holdings, you can compare the effects of market volatilities on Citigroup and Afcon 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 Afcon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Afcon Holdings.
Diversification Opportunities for Citigroup and Afcon Holdings
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Afcon is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Afcon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afcon 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 Afcon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afcon Holdings has no effect on the direction of Citigroup i.e., Citigroup and Afcon Holdings go up and down completely randomly.
Pair Corralation between Citigroup and Afcon Holdings
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.1 times less return on investment than Afcon Holdings. But when comparing it to its historical volatility, Citigroup is 1.53 times less risky than Afcon Holdings. It trades about 0.08 of its potential returns per unit of risk. Afcon Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 941,100 in Afcon Holdings on September 4, 2024 and sell it today you would earn a total of 383,900 from holding Afcon Holdings or generate 40.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 78.28% |
| Values | Daily Returns |
Citigroup vs. Afcon Holdings
Performance |
| Timeline |
| Citigroup |
| Afcon Holdings |
Citigroup and Afcon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Afcon Holdings
The main advantage of trading using opposite Citigroup and Afcon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Afcon 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 Afcon Holdings will offset losses from the drop in Afcon Holdings' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Afcon Holdings vs. Hilan | Afcon Holdings vs. Matrix | Afcon Holdings vs. AudioCodes | Afcon Holdings vs. Tadiran Hldg |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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