Correlation Between Citigroup and Pou Chen
Can any of the company-specific risk be diversified away by investing in both Citigroup and Pou Chen 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 Pou Chen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Pou Chen Corp, you can compare the effects of market volatilities on Citigroup and Pou Chen 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 Pou Chen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Pou Chen.
Diversification Opportunities for Citigroup and Pou Chen
Very poor diversification
The 3 months correlation between Citigroup and Pou is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Pou Chen Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pou Chen Corp 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 Pou Chen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pou Chen Corp has no effect on the direction of Citigroup i.e., Citigroup and Pou Chen go up and down completely randomly.
Pair Corralation between Citigroup and Pou Chen
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.08 times less return on investment than Pou Chen. In addition to that, Citigroup is 1.17 times more volatile than Pou Chen Corp. It trades about 0.25 of its total potential returns per unit of risk. Pou Chen Corp is currently generating about 0.32 per unit of volatility. If you would invest 3,830 in Pou Chen Corp on August 28, 2024 and sell it today you would earn a total of 475.00 from holding Pou Chen Corp or generate 12.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Pou Chen Corp
Performance |
| Timeline |
| Citigroup |
| Pou Chen Corp |
Citigroup and Pou Chen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Pou Chen
The main advantage of trading using opposite Citigroup and Pou Chen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Pou Chen 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 Pou Chen will offset losses from the drop in Pou Chen'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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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