Correlation Between Citigroup and Asiana Airlines
Can any of the company-specific risk be diversified away by investing in both Citigroup and Asiana Airlines 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 Asiana Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Asiana Airlines, you can compare the effects of market volatilities on Citigroup and Asiana Airlines 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 Asiana Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Asiana Airlines.
Diversification Opportunities for Citigroup and Asiana Airlines
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Asiana is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Asiana Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asiana Airlines 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 Asiana Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asiana Airlines has no effect on the direction of Citigroup i.e., Citigroup and Asiana Airlines go up and down completely randomly.
Pair Corralation between Citigroup and Asiana Airlines
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.97 times more return on investment than Asiana Airlines. However, Citigroup is 1.03 times less risky than Asiana Airlines. It trades about 0.05 of its potential returns per unit of risk. Asiana Airlines is currently generating about -0.02 per unit of risk. If you would invest 4,398 in Citigroup on January 17, 2025 and sell it today you would earn a total of 2,035 from holding Citigroup or generate 46.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.76% |
| Values | Daily Returns |
Citigroup vs. Asiana Airlines
Performance |
| Timeline |
| Citigroup |
| Asiana Airlines |
Citigroup and Asiana Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Asiana Airlines
The main advantage of trading using opposite Citigroup and Asiana Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Asiana Airlines 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 Asiana Airlines will offset losses from the drop in Asiana Airlines' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Asiana Airlines vs. Finebesteel | Asiana Airlines vs. Hanil Iron Steel | Asiana Airlines vs. Fine Besteel Co | Asiana Airlines vs. LG Household Healthcare |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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