Correlation Between Citigroup and China International
Can any of the company-specific risk be diversified away by investing in both Citigroup and China International 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 China International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and China International Marine, you can compare the effects of market volatilities on Citigroup and China International 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 China International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and China International.
Diversification Opportunities for Citigroup and China International
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Citigroup and China is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and China International Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China International 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 China International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China International has no effect on the direction of Citigroup i.e., Citigroup and China International go up and down completely randomly.
Pair Corralation between Citigroup and China International
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.41 times more return on investment than China International. However, Citigroup is 2.44 times less risky than China International. It trades about 0.13 of its potential returns per unit of risk. China International Marine is currently generating about 0.03 per unit of risk. If you would invest 3,855 in Citigroup on September 26, 2024 and sell it today you would earn a total of 3,245 from holding Citigroup or generate 84.18% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.42% |
Values | Daily Returns |
Citigroup vs. China International Marine
Performance |
Timeline |
Citigroup |
China International |
Citigroup and China International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Citigroup and China International
The main advantage of trading using opposite Citigroup and China International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, China International 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 China International will offset losses from the drop in China International's long position.The idea behind Citigroup and China International Marine 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.China International vs. Allegheny Technologies Incorporated | China International vs. thyssenkrupp AG | China International vs. thyssenkrupp AG | China International vs. Mueller Industries |
Check out your portfolio center.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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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