Correlation Between Citigroup and China Railway
Can any of the company-specific risk be diversified away by investing in both Citigroup and China Railway 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 Railway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and China Railway Group, you can compare the effects of market volatilities on Citigroup and China Railway 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 Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and China Railway.
Diversification Opportunities for Citigroup and China Railway
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and China is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and China Railway Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Railway Group 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 Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Railway Group has no effect on the direction of Citigroup i.e., Citigroup and China Railway go up and down completely randomly.
Pair Corralation between Citigroup and China Railway
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.09 times more return on investment than China Railway. However, Citigroup is 1.09 times more volatile than China Railway Group. It trades about 0.27 of its potential returns per unit of risk. China Railway Group is currently generating about -0.15 per unit of risk. If you would invest 6,315 in Citigroup on September 2, 2024 and sell it today you would earn a total of 772.00 from holding Citigroup or generate 12.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Citigroup vs. China Railway Group
Performance |
| Timeline |
| Citigroup |
| China Railway Group |
Citigroup and China Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and China Railway
The main advantage of trading using opposite Citigroup and China Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, China Railway 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 Railway will offset losses from the drop in China Railway's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| China Railway vs. Perdoceo Education | China Railway vs. Spirent Communications plc | China Railway vs. Consolidated Communications Holdings | China Railway vs. Sims Metal Management |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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