Correlation Between Citigroup and Daewoo Engineering
Can any of the company-specific risk be diversified away by investing in both Citigroup and Daewoo Engineering 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 Daewoo Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Daewoo Engineering Construction, you can compare the effects of market volatilities on Citigroup and Daewoo Engineering 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 Daewoo Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Daewoo Engineering.
Diversification Opportunities for Citigroup and Daewoo Engineering
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Citigroup and Daewoo is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Daewoo Engineering Constructio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewoo Engineering 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 Daewoo Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewoo Engineering has no effect on the direction of Citigroup i.e., Citigroup and Daewoo Engineering go up and down completely randomly.
Pair Corralation between Citigroup and Daewoo Engineering
Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Daewoo Engineering. But the stock apears to be less risky and, when comparing its historical volatility, Citigroup is 1.54 times less risky than Daewoo Engineering. The stock trades about -0.02 of its potential returns per unit of risk. The Daewoo Engineering Construction is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 337,500 in Daewoo Engineering Construction on November 27, 2024 and sell it today you would earn a total of 21,500 from holding Daewoo Engineering Construction or generate 6.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.0% |
| Values | Daily Returns |
Citigroup vs. Daewoo Engineering Constructio
Performance |
| Timeline |
| Citigroup |
| Daewoo Engineering |
Citigroup and Daewoo Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Daewoo Engineering
The main advantage of trading using opposite Citigroup and Daewoo Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Daewoo Engineering 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 Daewoo Engineering will offset losses from the drop in Daewoo Engineering's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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