Correlation Between Citigroup and Thai Steel
Can any of the company-specific risk be diversified away by investing in both Citigroup and Thai Steel 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 Thai Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Thai Steel Cable, you can compare the effects of market volatilities on Citigroup and Thai Steel 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 Thai Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Thai Steel.
Diversification Opportunities for Citigroup and Thai Steel
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Citigroup and Thai is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Thai Steel Cable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Steel Cable 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 Thai Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Steel Cable has no effect on the direction of Citigroup i.e., Citigroup and Thai Steel go up and down completely randomly.
Pair Corralation between Citigroup and Thai Steel
Taking into account the 90-day investment horizon Citigroup is expected to generate 51.98 times less return on investment than Thai Steel. But when comparing it to its historical volatility, Citigroup is 46.88 times less risky than Thai Steel. It trades about 0.07 of its potential returns per unit of risk. Thai Steel Cable is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,420 in Thai Steel Cable on September 1, 2024 and sell it today you would earn a total of 60.00 from holding Thai Steel Cable or generate 4.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Citigroup vs. Thai Steel Cable
Performance |
| Timeline |
| Citigroup |
| Thai Steel Cable |
Citigroup and Thai Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Thai Steel
The main advantage of trading using opposite Citigroup and Thai Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Thai Steel 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 Thai Steel will offset losses from the drop in Thai Steel'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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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