Correlation Between Citigroup and Cosan SA

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

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

Diversification Opportunities for Citigroup and Cosan SA

-0.82

Correlation Coefficient

Citigroup  Cosan SA

Pay attention - limited upside

The 3 months correlation between Citigroup and Cosan is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Cosan SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cosan SA ADR 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 Cosan SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cosan SA ADR has no effect on the direction of Citigroup i.e., Citigroup and Cosan SA go up and down completely randomly.

Pair Corralation between Citigroup and Cosan SA

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.49 times more return on investment than Cosan SA. However, Citigroup is 2.05 times less risky than Cosan SA. It trades about 0.32 of its potential returns per unit of risk. Cosan SA ADR is currently generating about -0.11 per unit of risk. If you would invest  7,024  in Citigroup on May 3, 2025 and sell it today you would earn a total of  2,346  from holding Citigroup or generate 33.4% return on investment over 90 days.

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

Citigroup  vs.  Cosan SA ADR

Citigroup

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Cosan SA ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cosan SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in September 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Citigroup and Cosan SA

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

The idea behind Citigroup and Cosan SA ADR 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.