Correlation Between Citigroup and KENGEN PLC

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

Diversification Opportunities for Citigroup and KENGEN PLC

0.4
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Citigroup and KENGEN is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and KENGEN PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENGEN PLC 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 KENGEN PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KENGEN PLC has no effect on the direction of Citigroup i.e., Citigroup and KENGEN PLC go up and down completely randomly.

Pair Corralation between Citigroup and KENGEN PLC

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.79 times more return on investment than KENGEN PLC. However, Citigroup is 1.27 times less risky than KENGEN PLC. It trades about 0.41 of its potential returns per unit of risk. KENGEN PLC is currently generating about 0.24 per unit of risk. If you would invest  6,994  in Citigroup on November 3, 2024 and sell it today you would earn a total of  1,149  from holding Citigroup or generate 16.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

Citigroup  vs.  KENGEN PLC

 Performance 
       Timeline  
Citigroup 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 20 (%) 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.
KENGEN PLC 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in KENGEN PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, KENGEN PLC may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Citigroup and KENGEN PLC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Citigroup and KENGEN PLC

The main advantage of trading using opposite Citigroup and KENGEN PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, KENGEN PLC 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 KENGEN PLC will offset losses from the drop in KENGEN PLC's long position.
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The idea behind Citigroup and KENGEN PLC 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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