Correlation Between Citigroup and AIICO INSURANCE

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

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

Diversification Opportunities for Citigroup and AIICO INSURANCE

0.62

Correlation Coefficient

Citigroup  AIICO INSURANCE

Poor diversification

The 3 months correlation between Citigroup and AIICO is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and AIICO INSURANCE PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIICO INSURANCE 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 AIICO INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIICO INSURANCE PLC has no effect on the direction of Citigroup i.e., Citigroup and AIICO INSURANCE go up and down completely randomly.

Pair Corralation between Citigroup and AIICO INSURANCE

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.49 times more return on investment than AIICO INSURANCE. However, Citigroup is 2.04 times less risky than AIICO INSURANCE. It trades about 0.4 of its potential returns per unit of risk. AIICO INSURANCE PLC is currently generating about 0.19 per unit of risk. If you would invest  6,404  in Citigroup on April 22, 2025 and sell it today you would earn a total of  2,861  from holding Citigroup or generate 44.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Citigroup  vs.  AIICO INSURANCE PLC

Citigroup

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

AIICO INSURANCE PLC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AIICO INSURANCE PLC are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, AIICO INSURANCE showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and AIICO INSURANCE

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

The idea behind Citigroup and AIICO INSURANCE 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.