Correlation Between Citigroup and CompuGroup Medical
Can any of the company-specific risk be diversified away by investing in both Citigroup and CompuGroup Medical 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 CompuGroup Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and CompuGroup Medical SE, you can compare the effects of market volatilities on Citigroup and CompuGroup Medical 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 CompuGroup Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and CompuGroup Medical.
Diversification Opportunities for Citigroup and CompuGroup Medical
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Citigroup and CompuGroup is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and CompuGroup Medical SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompuGroup Medical 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 CompuGroup Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CompuGroup Medical has no effect on the direction of Citigroup i.e., Citigroup and CompuGroup Medical go up and down completely randomly.
Pair Corralation between Citigroup and CompuGroup Medical
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.54 times more return on investment than CompuGroup Medical. However, Citigroup is 1.86 times less risky than CompuGroup Medical. It trades about 0.11 of its potential returns per unit of risk. CompuGroup Medical SE is currently generating about -0.08 per unit of risk. If you would invest 4,567 in Citigroup on August 29, 2024 and sell it today you would earn a total of 2,408 from holding Citigroup or generate 52.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.8% |
| Values | Daily Returns |
Citigroup vs. CompuGroup Medical SE
Performance |
| Timeline |
| Citigroup |
| CompuGroup Medical |
Citigroup and CompuGroup Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and CompuGroup Medical
The main advantage of trading using opposite Citigroup and CompuGroup Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, CompuGroup Medical 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 CompuGroup Medical will offset losses from the drop in CompuGroup Medical's long position.The idea behind Citigroup and CompuGroup Medical SE 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.| CompuGroup Medical vs. Superior Plus Corp | CompuGroup Medical vs. NMI Holdings | CompuGroup Medical vs. Origin Agritech | CompuGroup Medical vs. SIVERS SEMICONDUCTORS AB |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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