Correlation Between Citigroup and Tong Hua
Can any of the company-specific risk be diversified away by investing in both Citigroup and Tong Hua 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 Tong Hua into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Tong Hua Holding, you can compare the effects of market volatilities on Citigroup and Tong Hua 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 Tong Hua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Tong Hua.
Diversification Opportunities for Citigroup and Tong Hua
Very good diversification
The 3 months correlation between Citigroup and Tong is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Tong Hua Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tong Hua Holding 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 Tong Hua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tong Hua Holding has no effect on the direction of Citigroup i.e., Citigroup and Tong Hua go up and down completely randomly.
Pair Corralation between Citigroup and Tong Hua
Taking into account the 90-day investment horizon Citigroup is expected to generate 50.53 times less return on investment than Tong Hua. But when comparing it to its historical volatility, Citigroup is 46.74 times less risky than Tong Hua. It trades about 0.07 of its potential returns per unit of risk. Tong Hua Holding is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 90.00 in Tong Hua Holding on September 1, 2024 and sell it today you would lose (17.00) from holding Tong Hua Holding or give up 18.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Citigroup vs. Tong Hua Holding
Performance |
| Timeline |
| Citigroup |
| Tong Hua Holding |
Citigroup and Tong Hua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Tong Hua
The main advantage of trading using opposite Citigroup and Tong Hua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Tong Hua 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 Tong Hua will offset losses from the drop in Tong Hua's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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