Correlation Between Citigroup and Xiaomi Corp
Can any of the company-specific risk be diversified away by investing in both Citigroup and Xiaomi Corp 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 Xiaomi Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Xiaomi Corp ADR, you can compare the effects of market volatilities on Citigroup and Xiaomi Corp 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 Xiaomi Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Xiaomi Corp.
Diversification Opportunities for Citigroup and Xiaomi Corp
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Citigroup and Xiaomi is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Xiaomi Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiaomi Corp ADR 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 Xiaomi Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiaomi Corp ADR has no effect on the direction of Citigroup i.e., Citigroup and Xiaomi Corp go up and down completely randomly.
Pair Corralation between Citigroup and Xiaomi Corp
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.67 times less return on investment than Xiaomi Corp. But when comparing it to its historical volatility, Citigroup is 1.76 times less risky than Xiaomi Corp. It trades about 0.25 of its potential returns per unit of risk. Xiaomi Corp ADR is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,744 in Xiaomi Corp ADR on November 1, 2024 and sell it today you would earn a total of 909.00 from holding Xiaomi Corp ADR or generate 52.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Xiaomi Corp ADR
Performance |
| Timeline |
| Citigroup |
| Xiaomi Corp ADR |
Citigroup and Xiaomi Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Xiaomi Corp
The main advantage of trading using opposite Citigroup and Xiaomi Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Xiaomi Corp 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 Xiaomi Corp will offset losses from the drop in Xiaomi Corp's long position.| Citigroup vs. Royal Bank of | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Canadian Imperial Bank |
| Xiaomi Corp vs. Samsung Electronics Co | Xiaomi Corp vs. Sharp Corp ADR | Xiaomi Corp vs. LG Display Co | Xiaomi Corp vs. Universal Electronics |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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