Correlation Between Citigroup and Lutian Machinery
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By analyzing existing cross correlation between Citigroup and Lutian Machinery Co, you can compare the effects of market volatilities on Citigroup and Lutian Machinery 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 Lutian Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Lutian Machinery.
Diversification Opportunities for Citigroup and Lutian Machinery
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Lutian is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Lutian Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lutian Machinery 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 Lutian Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lutian Machinery has no effect on the direction of Citigroup i.e., Citigroup and Lutian Machinery go up and down completely randomly.
Pair Corralation between Citigroup and Lutian Machinery
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.74 times more return on investment than Lutian Machinery. However, Citigroup is 1.34 times less risky than Lutian Machinery. It trades about 0.21 of its potential returns per unit of risk. Lutian Machinery Co is currently generating about 0.13 per unit of risk. If you would invest 6,360 in Citigroup on August 29, 2024 and sell it today you would earn a total of 615.00 from holding Citigroup or generate 9.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Lutian Machinery Co
Performance |
| Timeline |
| Citigroup |
| Lutian Machinery |
Citigroup and Lutian Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Lutian Machinery
The main advantage of trading using opposite Citigroup and Lutian Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Lutian Machinery 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 Lutian Machinery will offset losses from the drop in Lutian Machinery's long position.The idea behind Citigroup and Lutian Machinery Co 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.| Lutian Machinery vs. Biwin Storage Technology | Lutian Machinery vs. PetroChina Co Ltd | Lutian Machinery vs. Industrial and Commercial | Lutian Machinery vs. China Construction Bank |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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