Correlation Between Citigroup and China Overseas
Can any of the company-specific risk be diversified away by investing in both Citigroup and China Overseas 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 China Overseas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and China Overseas Land, you can compare the effects of market volatilities on Citigroup and China Overseas 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 China Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and China Overseas.
Diversification Opportunities for Citigroup and China Overseas
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Citigroup and China is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and China Overseas Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Overseas Land 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 China Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Overseas Land has no effect on the direction of Citigroup i.e., Citigroup and China Overseas go up and down completely randomly.
Pair Corralation between Citigroup and China Overseas
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.47 times more return on investment than China Overseas. However, Citigroup is 2.15 times less risky than China Overseas. It trades about 0.08 of its potential returns per unit of risk. China Overseas Land is currently generating about 0.0 per unit of risk. If you would invest 4,525 in Citigroup on August 31, 2024 and sell it today you would earn a total of 2,562 from holding Citigroup or generate 56.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.93% |
| Values | Daily Returns |
Citigroup vs. China Overseas Land
Performance |
| Timeline |
| Citigroup |
| China Overseas Land |
Citigroup and China Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and China Overseas
The main advantage of trading using opposite Citigroup and China Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, China Overseas 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 China Overseas will offset losses from the drop in China Overseas' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| China Overseas vs. HUMANA INC | China Overseas vs. SCOR PK | China Overseas vs. Aquagold International | China Overseas vs. Thrivent High Yield |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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