Correlation Between Citigroup and CHINA FORTUNE
Can any of the company-specific risk be diversified away by investing in both Citigroup and CHINA FORTUNE 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 FORTUNE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and CHINA FORTUNE HLDGHD001, you can compare the effects of market volatilities on Citigroup and CHINA FORTUNE 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 FORTUNE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and CHINA FORTUNE.
Diversification Opportunities for Citigroup and CHINA FORTUNE
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and CHINA is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and CHINA FORTUNE HLDGHD001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA FORTUNE HLDGHD001 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 FORTUNE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA FORTUNE HLDGHD001 has no effect on the direction of Citigroup i.e., Citigroup and CHINA FORTUNE go up and down completely randomly.
Pair Corralation between Citigroup and CHINA FORTUNE
Taking into account the 90-day investment horizon Citigroup is expected to generate 20.0 times less return on investment than CHINA FORTUNE. But when comparing it to its historical volatility, Citigroup is 20.53 times less risky than CHINA FORTUNE. It trades about 0.12 of its potential returns per unit of risk. CHINA FORTUNE HLDGHD001 is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2.45 in CHINA FORTUNE HLDGHD001 on November 28, 2024 and sell it today you would lose (0.75) from holding CHINA FORTUNE HLDGHD001 or give up 30.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.58% |
| Values | Daily Returns |
Citigroup vs. CHINA FORTUNE HLDGHD001
Performance |
| Timeline |
| Citigroup |
| CHINA FORTUNE HLDGHD001 |
Citigroup and CHINA FORTUNE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and CHINA FORTUNE
The main advantage of trading using opposite Citigroup and CHINA FORTUNE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, CHINA FORTUNE 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 FORTUNE will offset losses from the drop in CHINA FORTUNE's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| CHINA FORTUNE vs. Apple Inc | CHINA FORTUNE vs. Apple Inc | CHINA FORTUNE vs. Samsung Electronics Co | CHINA FORTUNE vs. Samsung Electronics Co |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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