Correlation Between Citigroup and Shanxi Tond
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By analyzing existing cross correlation between Citigroup and Shanxi Tond Chemical, you can compare the effects of market volatilities on Citigroup and Shanxi Tond 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 Shanxi Tond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Shanxi Tond.
Diversification Opportunities for Citigroup and Shanxi Tond
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Shanxi is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Shanxi Tond Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanxi Tond Chemical 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 Shanxi Tond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanxi Tond Chemical has no effect on the direction of Citigroup i.e., Citigroup and Shanxi Tond go up and down completely randomly.
Pair Corralation between Citigroup and Shanxi Tond
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.69 times more return on investment than Shanxi Tond. However, Citigroup is 1.46 times less risky than Shanxi Tond. It trades about 0.13 of its potential returns per unit of risk. Shanxi Tond Chemical is currently generating about -0.02 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 Together |
| Strength | Strong |
| Accuracy | 95.82% |
| Values | Daily Returns |
Citigroup vs. Shanxi Tond Chemical
Performance |
| Timeline |
| Citigroup |
| Shanxi Tond Chemical |
Citigroup and Shanxi Tond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Shanxi Tond
The main advantage of trading using opposite Citigroup and Shanxi Tond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Shanxi Tond 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 Shanxi Tond will offset losses from the drop in Shanxi Tond's long position.The idea behind Citigroup and Shanxi Tond Chemical 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.| Shanxi Tond vs. Zijin Mining Group | Shanxi Tond vs. Wanhua Chemical Group | Shanxi Tond vs. Baoshan Iron Steel | Shanxi Tond vs. Shandong Gold Mining |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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