Correlation Between Citigroup and China Union
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By analyzing existing cross correlation between Citigroup and China Union Holdings, you can compare the effects of market volatilities on Citigroup and China Union 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 Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and China Union.
Diversification Opportunities for Citigroup and China Union
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and China is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and China Union Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Union Holdings 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 Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Union Holdings has no effect on the direction of Citigroup i.e., Citigroup and China Union go up and down completely randomly.
Pair Corralation between Citigroup and China Union
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.55 times more return on investment than China Union. However, Citigroup is 1.82 times less risky than China Union. It trades about 0.07 of its potential returns per unit of risk. China Union Holdings is currently generating about -0.62 per unit of risk. If you would invest 6,975 in Citigroup on September 27, 2024 and sell it today you would earn a total of 125.00 from holding Citigroup or generate 1.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Citigroup vs. China Union Holdings
Performance |
| Timeline |
| Citigroup |
| China Union Holdings |
Citigroup and China Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and China Union
The main advantage of trading using opposite Citigroup and China Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, China Union 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 Union will offset losses from the drop in China Union's long position.The idea behind Citigroup and China Union Holdings 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 Union vs. PetroChina Co Ltd | China Union vs. China Mobile Limited | China Union vs. CNOOC Limited | China Union vs. Ping An Insurance |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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