Correlation Between Citigroup and Ayala PharmaceuticalsI

Can any of the company-specific risk be diversified away by investing in both Citigroup and Ayala PharmaceuticalsI 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 Ayala PharmaceuticalsI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and Ayala PharmaceuticalsInc, you can compare the effects of market volatilities on Citigroup and Ayala PharmaceuticalsI 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 Ayala PharmaceuticalsI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Ayala PharmaceuticalsI.

Diversification Opportunities for Citigroup and Ayala PharmaceuticalsI

-0.47

Correlation Coefficient

Citigroup  Ayala PharmaceuticalsI

Very good diversification

The 3 months correlation between Citigroup and Ayala is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Ayala PharmaceuticalsInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ayala PharmaceuticalsInc 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 Ayala PharmaceuticalsI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ayala PharmaceuticalsInc has no effect on the direction of Citigroup i.e., Citigroup and Ayala PharmaceuticalsI go up and down completely randomly.

Pair Corralation between Citigroup and Ayala PharmaceuticalsI

If you would invest  5,566  in Citigroup on March 2, 2024 and sell it today you would earn a total of  665.00  from holding Citigroup or generate 11.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	0.0%
Values	Daily Returns

Citigroup  vs.  Ayala PharmaceuticalsInc

Citigroup

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Ayala PharmaceuticalsInc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ayala PharmaceuticalsInc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Ayala PharmaceuticalsI is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Ayala PharmaceuticalsI

The main advantage of trading using opposite Citigroup and Ayala PharmaceuticalsI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Ayala PharmaceuticalsI 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 Ayala PharmaceuticalsI will offset losses from the drop in Ayala PharmaceuticalsI's long position.

The idea behind Citigroup and Ayala PharmaceuticalsInc 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.