Correlation Between Citigroup and Autohome

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

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

Diversification Opportunities for Citigroup and Autohome

-0.04

Correlation Coefficient

Citigroup  Autohome

Good diversification

The 3 months correlation between Citigroup and Autohome is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Autohome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome 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 Autohome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autohome has no effect on the direction of Citigroup i.e., Citigroup and Autohome go up and down completely randomly.

Pair Corralation between Citigroup and Autohome

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.78 times more return on investment than Autohome. However, Citigroup is 1.29 times less risky than Autohome. It trades about 0.06 of its potential returns per unit of risk. Autohome is currently generating about 0.04 per unit of risk. If you would invest  6,173  in Citigroup on February 7, 2024 and sell it today you would earn a total of  108.00  from holding Citigroup or generate 1.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Autohome

Citigroup

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 13 (%) 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.

Autohome

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Autohome are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical indicators, Autohome is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Autohome

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

The idea behind Citigroup and Autohome 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.