Correlation Between Citigroup and Korea Gas
Can any of the company-specific risk be diversified away by investing in both Citigroup and Korea Gas 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 Korea Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Korea Gas, you can compare the effects of market volatilities on Citigroup and Korea Gas 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 Korea Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Korea Gas.
Diversification Opportunities for Citigroup and Korea Gas
Very good diversification
The 3 months correlation between Citigroup and Korea is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Korea Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Gas 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 Korea Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Gas has no effect on the direction of Citigroup i.e., Citigroup and Korea Gas go up and down completely randomly.
Pair Corralation between Citigroup and Korea Gas
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.47 times less return on investment than Korea Gas. But when comparing it to its historical volatility, Citigroup is 1.6 times less risky than Korea Gas. It trades about 0.21 of its potential returns per unit of risk. Korea Gas is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 3,940,000 in Korea Gas on August 31, 2024 and sell it today you would earn a total of 555,000 from holding Korea Gas or generate 14.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Korea Gas
Performance |
| Timeline |
| Citigroup |
| Korea Gas |
Citigroup and Korea Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Korea Gas
The main advantage of trading using opposite Citigroup and Korea Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Korea Gas 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 Korea Gas will offset losses from the drop in Korea Gas' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Korea Gas vs. Lotte Data Communication | Korea Gas vs. Daishin Information Communications | Korea Gas vs. Kisan Telecom Co | Korea Gas vs. Lotte Chilsung Beverage |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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