Correlation Between Citigroup and Asia Optical
Can any of the company-specific risk be diversified away by investing in both Citigroup and Asia Optical 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 Asia Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Asia Optical Co, you can compare the effects of market volatilities on Citigroup and Asia Optical 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 Asia Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Asia Optical.
Diversification Opportunities for Citigroup and Asia Optical
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Asia is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Asia Optical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Optical 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 Asia Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Optical has no effect on the direction of Citigroup i.e., Citigroup and Asia Optical go up and down completely randomly.
Pair Corralation between Citigroup and Asia Optical
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.9 times less return on investment than Asia Optical. But when comparing it to its historical volatility, Citigroup is 1.6 times less risky than Asia Optical. It trades about 0.09 of its potential returns per unit of risk. Asia Optical Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 6,700 in Asia Optical Co on November 28, 2024 and sell it today you would earn a total of 13,600 from holding Asia Optical Co or generate 202.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.89% |
| Values | Daily Returns |
Citigroup vs. Asia Optical Co
Performance |
| Timeline |
| Citigroup |
| Asia Optical |
Citigroup and Asia Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Asia Optical
The main advantage of trading using opposite Citigroup and Asia Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Asia Optical 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 Asia Optical will offset losses from the drop in Asia Optical's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Asia Optical vs. LARGAN Precision Co | Asia Optical vs. Novatek Microelectronics Corp | Asia Optical vs. Genius Electronic Optical | Asia Optical vs. Catcher Technology 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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