Correlation Between Citigroup and Alakasa Industrindo
Can any of the company-specific risk be diversified away by investing in both Citigroup and Alakasa Industrindo 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 Alakasa Industrindo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Alakasa Industrindo Tbk, you can compare the effects of market volatilities on Citigroup and Alakasa Industrindo 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 Alakasa Industrindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Alakasa Industrindo.
Diversification Opportunities for Citigroup and Alakasa Industrindo
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Citigroup and Alakasa is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Alakasa Industrindo Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alakasa Industrindo Tbk 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 Alakasa Industrindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alakasa Industrindo Tbk has no effect on the direction of Citigroup i.e., Citigroup and Alakasa Industrindo go up and down completely randomly.
Pair Corralation between Citigroup and Alakasa Industrindo
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.31 times less return on investment than Alakasa Industrindo. But when comparing it to its historical volatility, Citigroup is 3.99 times less risky than Alakasa Industrindo. It trades about 0.07 of its potential returns per unit of risk. Alakasa Industrindo Tbk is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 25,800 in Alakasa Industrindo Tbk on August 30, 2024 and sell it today you would earn a total of 12,000 from holding Alakasa Industrindo Tbk or generate 46.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.76% |
| Values | Daily Returns |
Citigroup vs. Alakasa Industrindo Tbk
Performance |
| Timeline |
| Citigroup |
| Alakasa Industrindo Tbk |
Citigroup and Alakasa Industrindo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Alakasa Industrindo
The main advantage of trading using opposite Citigroup and Alakasa Industrindo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Alakasa Industrindo 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 Alakasa Industrindo will offset losses from the drop in Alakasa Industrindo's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Alakasa Industrindo vs. Argha Karya Prima | Alakasa Industrindo vs. Alumindo Light Metal | Alakasa Industrindo vs. Asiaplast Industries Tbk | Alakasa Industrindo vs. Akbar Indomakmur Stimec |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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