Correlation Between Citigroup and Lion Biotechnologies
Can any of the company-specific risk be diversified away by investing in both Citigroup and Lion Biotechnologies 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 Biotechnologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Lion Biotechnologies, you can compare the effects of market volatilities on Citigroup and Lion Biotechnologies 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 Biotechnologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Lion Biotechnologies.
Diversification Opportunities for Citigroup and Lion Biotechnologies
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Citigroup and Lion is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Lion Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Biotechnologies 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 Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Biotechnologies has no effect on the direction of Citigroup i.e., Citigroup and Lion Biotechnologies go up and down completely randomly.
Pair Corralation between Citigroup and Lion Biotechnologies
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.39 times more return on investment than Lion Biotechnologies. However, Citigroup is 2.58 times less risky than Lion Biotechnologies. It trades about 0.25 of its potential returns per unit of risk. Lion Biotechnologies is currently generating about -0.1 per unit of risk. If you would invest 6,360 in Citigroup on August 28, 2024 and sell it today you would earn a total of 715.00 from holding Citigroup or generate 11.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Lion Biotechnologies
Performance |
| Timeline |
| Citigroup |
| Lion Biotechnologies |
Citigroup and Lion Biotechnologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Lion Biotechnologies
The main advantage of trading using opposite Citigroup and Lion Biotechnologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Lion Biotechnologies 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 Biotechnologies will offset losses from the drop in Lion Biotechnologies' long position.The idea behind Citigroup and Lion Biotechnologies 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.| Lion Biotechnologies vs. Nucletron Electronic Aktiengesellschaft | Lion Biotechnologies vs. ELECTRONIC ARTS | Lion Biotechnologies vs. Electronic Arts | Lion Biotechnologies vs. BYD ELECTRONIC |
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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