Correlation Between Data Communications and CITIGROUP CDR

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

By analyzing existing cross correlation between Data Communications Management and CITIGROUP CDR, you can compare the effects of market volatilities on Data Communications and CITIGROUP CDR 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 Data Communications with a short position of CITIGROUP CDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Data Communications and CITIGROUP CDR.

Diversification Opportunities for Data Communications and CITIGROUP CDR

0.77

Correlation Coefficient

Data Communications  CITIGROUP CDR

Poor diversification

The 3 months correlation between Data and CITIGROUP is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Data Communications Management and CITIGROUP CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIGROUP CDR and Data Communications 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 Data Communications Management are associated (or correlated) with CITIGROUP CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIGROUP CDR has no effect on the direction of Data Communications i.e., Data Communications and CITIGROUP CDR go up and down completely randomly.

Pair Corralation between Data Communications and CITIGROUP CDR

Assuming the 90 days trading horizon Data Communications Management is expected to generate 1.69 times more return on investment than CITIGROUP CDR. However, Data Communications is 1.69 times more volatile than CITIGROUP CDR. It trades about 0.12 of its potential returns per unit of risk. CITIGROUP CDR is currently generating about 0.16 per unit of risk. If you would invest  139.00  in Data Communications Management on September 24, 2025 and sell it today you would earn a total of  28.00  from holding Data Communications Management or generate 20.14% return on investment over 90 days.

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

Data Communications Management  vs.  CITIGROUP CDR

Data Communications

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Data Communications Management are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Data Communications displayed solid returns over the last few months and may actually be approaching a breakup point.

CITIGROUP CDR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CITIGROUP CDR are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, CITIGROUP CDR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Data Communications and CITIGROUP CDR

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

The idea behind Data Communications Management and CITIGROUP CDR 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.