Correlation Between Citigroup and Lion Chemtech
Can any of the company-specific risk be diversified away by investing in both Citigroup and Lion Chemtech 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 Lion Chemtech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Lion Chemtech Co, you can compare the effects of market volatilities on Citigroup and Lion Chemtech 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 Lion Chemtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Lion Chemtech.
Diversification Opportunities for Citigroup and Lion Chemtech
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Citigroup and Lion is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Lion Chemtech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Chemtech 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 Lion Chemtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Chemtech has no effect on the direction of Citigroup i.e., Citigroup and Lion Chemtech go up and down completely randomly.
Pair Corralation between Citigroup and Lion Chemtech
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.5 times more return on investment than Lion Chemtech. However, Citigroup is 2.02 times less risky than Lion Chemtech. It trades about 0.45 of its potential returns per unit of risk. Lion Chemtech Co is currently generating about -0.13 per unit of risk. If you would invest 6,842 in Citigroup on October 20, 2024 and sell it today you would earn a total of 1,157 from holding Citigroup or generate 16.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Lion Chemtech Co
Performance |
| Timeline |
| Citigroup |
| Lion Chemtech |
Citigroup and Lion Chemtech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Lion Chemtech
The main advantage of trading using opposite Citigroup and Lion Chemtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Lion Chemtech 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 Lion Chemtech will offset losses from the drop in Lion Chemtech's long position.| Citigroup vs. Bank of Montreal | Citigroup vs. Canadian Imperial Bank | Citigroup vs. Bank of Nova | Citigroup vs. JPMorgan Chase Co |
| Lion Chemtech vs. RFTech Co | Lion Chemtech vs. Shinhan Inverse Silver | Lion Chemtech vs. Hanmi Semiconductor Co | Lion Chemtech vs. A Tech Solution 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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