Correlation Between Citigroup and HK Electric
Can any of the company-specific risk be diversified away by investing in both Citigroup and HK Electric 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 HK Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and HK Electric Investments, you can compare the effects of market volatilities on Citigroup and HK Electric 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 HK Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and HK Electric.
Diversification Opportunities for Citigroup and HK Electric
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and HKT is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and HK Electric Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HK Electric Investments 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 HK Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HK Electric Investments has no effect on the direction of Citigroup i.e., Citigroup and HK Electric go up and down completely randomly.
Pair Corralation between Citigroup and HK Electric
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.42 times more return on investment than HK Electric. However, Citigroup is 2.42 times more volatile than HK Electric Investments. It trades about 0.21 of its potential returns per unit of risk. HK Electric Investments is currently generating about 0.0 per unit of risk. If you would invest 6,360 in Citigroup on August 28, 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. HK Electric Investments
Performance |
| Timeline |
| Citigroup |
| HK Electric Investments |
Citigroup and HK Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and HK Electric
The main advantage of trading using opposite Citigroup and HK Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, HK Electric 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 HK Electric will offset losses from the drop in HK Electric's long position.The idea behind Citigroup and HK Electric Investments 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.| HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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