Correlation Between Citigroup and Medy Tox
Can any of the company-specific risk be diversified away by investing in both Citigroup and Medy Tox 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 Medy Tox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Medy Tox, you can compare the effects of market volatilities on Citigroup and Medy Tox 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 Medy Tox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Medy Tox.
Diversification Opportunities for Citigroup and Medy Tox
Pay attention - limited upside
The 3 months correlation between Citigroup and Medy is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Medy Tox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medy Tox 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 Medy Tox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medy Tox has no effect on the direction of Citigroup i.e., Citigroup and Medy Tox go up and down completely randomly.
Pair Corralation between Citigroup and Medy Tox
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.46 times more return on investment than Medy Tox. However, Citigroup is 2.16 times less risky than Medy Tox. It trades about 0.07 of its potential returns per unit of risk. Medy Tox is currently generating about 0.02 per unit of risk. If you would invest 4,117 in Citigroup on August 28, 2024 and sell it today you would earn a total of 2,858 from holding Citigroup or generate 69.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.38% |
| Values | Daily Returns |
Citigroup vs. Medy Tox
Performance |
| Timeline |
| Citigroup |
| Medy Tox |
Citigroup and Medy Tox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Medy Tox
The main advantage of trading using opposite Citigroup and Medy Tox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Medy Tox 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 Medy Tox will offset losses from the drop in Medy Tox's long position.The idea behind Citigroup and Medy Tox 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.| Medy Tox vs. Busan Industrial Co | Medy Tox vs. Busan Ind | Medy Tox vs. Mirae Asset Daewoo | Medy Tox 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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