Correlation Between Citigroup and AFC Ajax

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

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

Diversification Opportunities for Citigroup and AFC Ajax

-0.67

Correlation Coefficient

Citigroup  AFC Ajax

Excellent diversification

The 3 months correlation between Citigroup and AFC is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and AFC Ajax NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFC Ajax NV 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 AFC Ajax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFC Ajax NV has no effect on the direction of Citigroup i.e., Citigroup and AFC Ajax go up and down completely randomly.

Pair Corralation between Citigroup and AFC Ajax

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.96 times more return on investment than AFC Ajax. However, Citigroup is 2.96 times more volatile than AFC Ajax NV. It trades about 0.38 of its potential returns per unit of risk. AFC Ajax NV is currently generating about -0.11 per unit of risk. If you would invest  6,833  in Citigroup on April 29, 2025 and sell it today you would earn a total of  2,774  from holding Citigroup or generate 40.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Citigroup  vs.  AFC Ajax NV

Citigroup

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 29 (%) 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.

AFC Ajax NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days AFC Ajax NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AFC Ajax is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Citigroup and AFC Ajax

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

The idea behind Citigroup and AFC Ajax NV 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.