Correlation Between Citigroup and PLASTIC INDUSTRY
Can any of the company-specific risk be diversified away by investing in both Citigroup and PLASTIC INDUSTRY 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 PLASTIC INDUSTRY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and PLASTIC INDUSTRY LTD, you can compare the effects of market volatilities on Citigroup and PLASTIC INDUSTRY 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 PLASTIC INDUSTRY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and PLASTIC INDUSTRY.
Diversification Opportunities for Citigroup and PLASTIC INDUSTRY
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and PLASTIC is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and PLASTIC INDUSTRY LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLASTIC INDUSTRY LTD 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 PLASTIC INDUSTRY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLASTIC INDUSTRY LTD has no effect on the direction of Citigroup i.e., Citigroup and PLASTIC INDUSTRY go up and down completely randomly.
Pair Corralation between Citigroup and PLASTIC INDUSTRY
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.45 times less return on investment than PLASTIC INDUSTRY. But when comparing it to its historical volatility, Citigroup is 3.79 times less risky than PLASTIC INDUSTRY. It trades about 0.07 of its potential returns per unit of risk. PLASTIC INDUSTRY LTD is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 4,695 in PLASTIC INDUSTRY LTD on September 2, 2024 and sell it today you would lose (320.00) from holding PLASTIC INDUSTRY LTD or give up 6.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.83% |
| Values | Daily Returns |
Citigroup vs. PLASTIC INDUSTRY LTD
Performance |
| Timeline |
| Citigroup |
| PLASTIC INDUSTRY LTD |
Citigroup and PLASTIC INDUSTRY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and PLASTIC INDUSTRY
The main advantage of trading using opposite Citigroup and PLASTIC INDUSTRY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, PLASTIC INDUSTRY 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 PLASTIC INDUSTRY will offset losses from the drop in PLASTIC INDUSTRY's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| PLASTIC INDUSTRY vs. FINCORP INVESTMENT LTD | PLASTIC INDUSTRY vs. MCB GROUP LTD | PLASTIC INDUSTRY vs. CAUDAN DEVELOPMENT LTD | PLASTIC INDUSTRY vs. NEW MAURITIUS HOTELS |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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