Correlation Between Citigroup and Jilin OLED

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

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

Diversification Opportunities for Citigroup and Jilin OLED

0.1

Correlation Coefficient

Citigroup  Jilin OLED

Average diversification

The 3 months correlation between Citigroup and Jilin is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Jilin OLED Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jilin OLED Material 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 Jilin OLED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jilin OLED Material has no effect on the direction of Citigroup i.e., Citigroup and Jilin OLED go up and down completely randomly.

Pair Corralation between Citigroup and Jilin OLED

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.61 times more return on investment than Jilin OLED. However, Citigroup is 1.65 times less risky than Jilin OLED. It trades about 0.04 of its potential returns per unit of risk. Jilin OLED Material is currently generating about 0.0 per unit of risk. If you would invest  6,929  in Citigroup on December 23, 2024 and sell it today you would earn a total of  269.00  from holding Citigroup or generate 3.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

Citigroup  vs.  Jilin OLED Material

Citigroup

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 3 (%) 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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Jilin OLED Material

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jilin OLED Material has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Jilin OLED 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 Jilin OLED

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

The idea behind Citigroup and Jilin OLED Material 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 Commodity Directory module to find actively traded commodities issued by global exchanges.