Correlation Between Citigroup and Inderes Oyj

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

Diversification Opportunities for Citigroup and Inderes Oyj

0.84
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Citigroup and Inderes is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Inderes Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inderes Oyj 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 Inderes Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inderes Oyj has no effect on the direction of Citigroup i.e., Citigroup and Inderes Oyj go up and down completely randomly.

Pair Corralation between Citigroup and Inderes Oyj

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.81 times more return on investment than Inderes Oyj. However, Citigroup is 1.23 times less risky than Inderes Oyj. It trades about 0.08 of its potential returns per unit of risk. Inderes Oyj is currently generating about 0.0 per unit of risk. If you would invest  4,054  in Citigroup on September 12, 2024 and sell it today you would earn a total of  3,196  from holding Citigroup or generate 78.84% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy99.6%
ValuesDaily Returns

Citigroup  vs.  Inderes Oyj

 Performance 
       Timeline  
Citigroup 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 16 (%) 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.
Inderes Oyj 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Inderes Oyj are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Inderes Oyj unveiled solid returns over the last few months and may actually be approaching a breakup point.

Citigroup and Inderes Oyj Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Citigroup and Inderes Oyj

The main advantage of trading using opposite Citigroup and Inderes Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Inderes Oyj 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 Inderes Oyj will offset losses from the drop in Inderes Oyj's long position.
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The idea behind Citigroup and Inderes Oyj 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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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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