Correlation Between Citigroup and King Chou
Can any of the company-specific risk be diversified away by investing in both Citigroup and King Chou 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 King Chou into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and King Chou Marine, you can compare the effects of market volatilities on Citigroup and King Chou 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 King Chou. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and King Chou.
Diversification Opportunities for Citigroup and King Chou
Average diversification
The 3 months correlation between Citigroup and King is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and King Chou Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on King Chou Marine 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 King Chou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of King Chou Marine has no effect on the direction of Citigroup i.e., Citigroup and King Chou go up and down completely randomly.
Pair Corralation between Citigroup and King Chou
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.27 times less return on investment than King Chou. But when comparing it to its historical volatility, Citigroup is 1.26 times less risky than King Chou. It trades about 0.2 of its potential returns per unit of risk. King Chou Marine is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 4,005 in King Chou Marine on September 13, 2024 and sell it today you would earn a total of 185.00 from holding King Chou Marine or generate 4.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Citigroup vs. King Chou Marine
Performance |
| Timeline |
| Citigroup |
| King Chou Marine |
Citigroup and King Chou Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and King Chou
The main advantage of trading using opposite Citigroup and King Chou positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, King Chou 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 King Chou will offset losses from the drop in King Chou's long position.| Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal | Citigroup vs. Bank of Nova |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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