Correlation Between Citigroup and Hwa Hong

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Can any of the company-specific risk be diversified away by investing in both Citigroup and Hwa Hong 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 Hwa Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Hwa Hong, you can compare the effects of market volatilities on Citigroup and Hwa Hong 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 Hwa Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Hwa Hong.

Diversification Opportunities for Citigroup and Hwa Hong

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Citigroup and Hwa Hong is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Hwa Hong in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hwa Hong 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 Hwa Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hwa Hong has no effect on the direction of Citigroup i.e., Citigroup and Hwa Hong go up and down completely randomly.

Pair Corralation between Citigroup and Hwa Hong

If you would invest (100.00)  in Hwa Hong on June 29, 2022 and sell it today you would earn a total of  100.00  from holding Hwa Hong or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Citigroup  vs.  Hwa Hong

 Performance (%) 
       Timeline  
Citigroup 
Citigroup Performance
0 of 100
Over the last 90 days Citigroup has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Citigroup Price Channel

Hwa Hong 
Hwa Hong Performance
0 of 100
Over the last 90 days Hwa Hong has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Hwa Hong is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Citigroup and Hwa Hong Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Citigroup and Hwa Hong

The main advantage of trading using opposite Citigroup and Hwa Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Hwa Hong 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 Hwa Hong will offset losses from the drop in Hwa Hong's long position.
Citigroup vs. Kibush Capital Corp
The idea behind Citigroup and Hwa Hong 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.
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Hwa Hong as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Hwa Hong's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Hwa Hong's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Hwa Hong.
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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