Correlation Between Citigroup and Chi Hua
Can any of the company-specific risk be diversified away by investing in both Citigroup and Chi Hua 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 Chi Hua into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Chi Hua Fitness, you can compare the effects of market volatilities on Citigroup and Chi Hua 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 Chi Hua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Chi Hua.
Diversification Opportunities for Citigroup and Chi Hua
Excellent diversification
The 3 months correlation between Citigroup and Chi is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Chi Hua Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chi Hua Fitness 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 Chi Hua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chi Hua Fitness has no effect on the direction of Citigroup i.e., Citigroup and Chi Hua go up and down completely randomly.
Pair Corralation between Citigroup and Chi Hua
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.2 times more return on investment than Chi Hua. However, Citigroup is 1.2 times more volatile than Chi Hua Fitness. It trades about 0.09 of its potential returns per unit of risk. Chi Hua Fitness is currently generating about -0.11 per unit of risk. If you would invest 5,476 in Citigroup on September 1, 2024 and sell it today you would earn a total of 1,611 from holding Citigroup or generate 29.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Chi Hua Fitness
Performance |
| Timeline |
| Citigroup |
| Chi Hua Fitness |
Citigroup and Chi Hua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Chi Hua
The main advantage of trading using opposite Citigroup and Chi Hua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Chi Hua 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 Chi Hua will offset losses from the drop in Chi Hua's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Chi Hua vs. Giant Manufacturing Co | Chi Hua vs. Merida Industry Co | Chi Hua vs. Johnson Health Tech | Chi Hua vs. Power Wind Health |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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