Correlation Between Citigroup and PT Charoen
Can any of the company-specific risk be diversified away by investing in both Citigroup and PT Charoen 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 PT Charoen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and PT Charoen Pokphand, you can compare the effects of market volatilities on Citigroup and PT Charoen 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 PT Charoen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and PT Charoen.
Diversification Opportunities for Citigroup and PT Charoen
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Citigroup and 0CP1 is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and PT Charoen Pokphand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Charoen Pokphand 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 PT Charoen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Charoen Pokphand has no effect on the direction of Citigroup i.e., Citigroup and PT Charoen go up and down completely randomly.
Pair Corralation between Citigroup and PT Charoen
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.79 times more return on investment than PT Charoen. However, Citigroup is 1.26 times less risky than PT Charoen. It trades about 0.07 of its potential returns per unit of risk. PT Charoen Pokphand is currently generating about 0.0 per unit of risk. If you would invest 6,013 in Citigroup on September 24, 2024 and sell it today you would earn a total of 964.00 from holding Citigroup or generate 16.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.45% |
| Values | Daily Returns |
Citigroup vs. PT Charoen Pokphand
Performance |
| Timeline |
| Citigroup |
| PT Charoen Pokphand |
Citigroup and PT Charoen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and PT Charoen
The main advantage of trading using opposite Citigroup and PT Charoen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, PT Charoen 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 PT Charoen will offset losses from the drop in PT Charoen's long position.The idea behind Citigroup and PT Charoen Pokphand 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.| PT Charoen vs. Archer Daniels Midland | PT Charoen vs. Tyson Foods | PT Charoen vs. Wilmar International Limited | PT Charoen vs. MOWI ASA SPADR |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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