Correlation Between Citigroup and Shinil Electronics
Can any of the company-specific risk be diversified away by investing in both Citigroup and Shinil Electronics 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 Shinil Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Shinil Electronics Co, you can compare the effects of market volatilities on Citigroup and Shinil Electronics 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 Shinil Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Shinil Electronics.
Diversification Opportunities for Citigroup and Shinil Electronics
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Citigroup and Shinil is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Shinil Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinil Electronics 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 Shinil Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinil Electronics has no effect on the direction of Citigroup i.e., Citigroup and Shinil Electronics go up and down completely randomly.
Pair Corralation between Citigroup and Shinil Electronics
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.03 times more return on investment than Shinil Electronics. However, Citigroup is 2.03 times more volatile than Shinil Electronics Co. It trades about 0.15 of its potential returns per unit of risk. Shinil Electronics Co is currently generating about -0.12 per unit of risk. If you would invest 6,133 in Citigroup on August 28, 2024 and sell it today you would earn a total of 842.00 from holding Citigroup or generate 13.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 93.02% |
| Values | Daily Returns |
Citigroup vs. Shinil Electronics Co
Performance |
| Timeline |
| Citigroup |
| Shinil Electronics |
Citigroup and Shinil Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Shinil Electronics
The main advantage of trading using opposite Citigroup and Shinil Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Shinil Electronics 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 Shinil Electronics will offset losses from the drop in Shinil Electronics' long position.The idea behind Citigroup and Shinil Electronics Co 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.| Shinil Electronics vs. Busan Industrial Co | Shinil Electronics vs. Busan Ind | Shinil Electronics vs. Mirae Asset Daewoo | Shinil Electronics vs. UNISEM Co |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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