Correlation Between Citigroup and AirAsia X
Can any of the company-specific risk be diversified away by investing in both Citigroup and AirAsia X 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 AirAsia X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and AirAsia X Bhd, you can compare the effects of market volatilities on Citigroup and AirAsia X 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 AirAsia X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and AirAsia X.
Diversification Opportunities for Citigroup and AirAsia X
Pay attention - limited upside
The 3 months correlation between Citigroup and AirAsia is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and AirAsia X Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AirAsia X Bhd 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 AirAsia X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AirAsia X Bhd has no effect on the direction of Citigroup i.e., Citigroup and AirAsia X go up and down completely randomly.
Pair Corralation between Citigroup and AirAsia X
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.76 times more return on investment than AirAsia X. However, Citigroup is 1.31 times less risky than AirAsia X. It trades about 0.45 of its potential returns per unit of risk. AirAsia X Bhd is currently generating about -0.07 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 | Flat |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Citigroup vs. AirAsia X Bhd
Performance |
| Timeline |
| Citigroup |
| AirAsia X Bhd |
Citigroup and AirAsia X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and AirAsia X
The main advantage of trading using opposite Citigroup and AirAsia X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, AirAsia X 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 AirAsia X will offset losses from the drop in AirAsia X's long position.| Citigroup vs. Bank of Montreal | Citigroup vs. Canadian Imperial Bank | Citigroup vs. Bank of Nova | Citigroup vs. JPMorgan Chase Co |
| AirAsia X vs. YX Precious Metals | AirAsia X vs. Star Media Group | AirAsia X vs. Central Industrial Corp | AirAsia X vs. Sapura Industrial Bhd |
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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