Correlation Between Citigroup and Zai Lab
Can any of the company-specific risk be diversified away by investing in both Citigroup and Zai Lab 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 Zai Lab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Zai Lab, you can compare the effects of market volatilities on Citigroup and Zai Lab 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 Zai Lab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Zai Lab.
Diversification Opportunities for Citigroup and Zai Lab
Very weak diversification
The 3 months correlation between Citigroup and Zai is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Zai Lab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zai Lab 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 Zai Lab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zai Lab has no effect on the direction of Citigroup i.e., Citigroup and Zai Lab go up and down completely randomly.
Pair Corralation between Citigroup and Zai Lab
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.6 times less return on investment than Zai Lab. But when comparing it to its historical volatility, Citigroup is 2.01 times less risky than Zai Lab. It trades about 0.15 of its potential returns per unit of risk. Zai Lab is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,414 in Zai Lab on August 31, 2024 and sell it today you would earn a total of 473.00 from holding Zai Lab or generate 19.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.78% |
| Values | Daily Returns |
Citigroup vs. Zai Lab
Performance |
| Timeline |
| Citigroup |
| Zai Lab |
Citigroup and Zai Lab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Zai Lab
The main advantage of trading using opposite Citigroup and Zai Lab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Zai Lab 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 Zai Lab will offset losses from the drop in Zai Lab's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Zai Lab vs. C4 Therapeutics | Zai Lab vs. Erasca Inc | Zai Lab vs. Cullinan Oncology LLC | Zai Lab vs. Legend Biotech Corp |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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