Correlation Between Citigroup and Changsha Jingjia

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

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

Diversification Opportunities for Citigroup and Changsha Jingjia

0.56

Correlation Coefficient

Citigroup  Changsha Jingjia

Very weak diversification

The 3 months correlation between Citigroup and Changsha is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Changsha Jingjia Microelectron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Changsha Jingjia Mic 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 Changsha Jingjia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Changsha Jingjia Mic has no effect on the direction of Citigroup i.e., Citigroup and Changsha Jingjia go up and down completely randomly.

Pair Corralation between Citigroup and Changsha Jingjia

Taking into account the 90-day investment horizon Citigroup is expected to generate 4.55 times less return on investment than Changsha Jingjia. But when comparing it to its historical volatility, Citigroup is 3.09 times less risky than Changsha Jingjia. It trades about 0.14 of its potential returns per unit of risk. Changsha Jingjia Microelectronics is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  5,799  in Changsha Jingjia Microelectronics on September 26, 2024 and sell it today you would earn a total of  4,736  from holding Changsha Jingjia Microelectronics or generate 81.67% return on investment over 90 days.

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

Citigroup  vs.  Changsha Jingjia Microelectron

Citigroup

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) 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.

Changsha Jingjia Mic

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Changsha Jingjia Microelectronics are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Changsha Jingjia sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Changsha Jingjia

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

The idea behind Citigroup and Changsha Jingjia Microelectronics 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.