Correlation Between Citigroup and Keum Kang

Can any of the company-specific risk be diversified away by investing in both Citigroup and Keum Kang 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 Keum Kang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and Keum Kang Steel, you can compare the effects of market volatilities on Citigroup and Keum Kang 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 Keum Kang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Keum Kang.

Diversification Opportunities for Citigroup and Keum Kang

-0.42

Correlation Coefficient

Citigroup  Keum Kang

Very good diversification

The 3 months correlation between Citigroup and Keum is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Keum Kang Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keum Kang Steel 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 Keum Kang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keum Kang Steel has no effect on the direction of Citigroup i.e., Citigroup and Keum Kang go up and down completely randomly.

Pair Corralation between Citigroup and Keum Kang

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.21 times more return on investment than Keum Kang. However, Citigroup is 1.21 times more volatile than Keum Kang Steel. It trades about 0.01 of its potential returns per unit of risk. Keum Kang Steel is currently generating about 0.01 per unit of risk. If you would invest  6,991  in Citigroup on December 29, 2024 and sell it today you would earn a total of  42.00  from holding Citigroup or generate 0.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.08%
Values	Daily Returns

Citigroup  vs.  Keum Kang Steel

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Keum Kang Steel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Keum Kang Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Keum Kang is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Keum Kang

The main advantage of trading using opposite Citigroup and Keum Kang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Keum Kang 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 Keum Kang will offset losses from the drop in Keum Kang's long position.

The idea behind Citigroup and Keum Kang Steel pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.