Correlation Between Citigroup and PT Indofood
Can any of the company-specific risk be diversified away by investing in both Citigroup and PT Indofood 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 Indofood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and PT Indofood Sukses, you can compare the effects of market volatilities on Citigroup and PT Indofood 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 Indofood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and PT Indofood.
Diversification Opportunities for Citigroup and PT Indofood
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and ISM is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and PT Indofood Sukses in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Indofood Sukses 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 Indofood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Indofood Sukses has no effect on the direction of Citigroup i.e., Citigroup and PT Indofood go up and down completely randomly.
Pair Corralation between Citigroup and PT Indofood
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.66 times more return on investment than PT Indofood. However, Citigroup is 1.51 times less risky than PT Indofood. It trades about 0.21 of its potential returns per unit of risk. PT Indofood Sukses is currently generating about -0.02 per unit of risk. If you would invest 6,360 in Citigroup on August 29, 2024 and sell it today you would earn a total of 615.00 from holding Citigroup or generate 9.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Citigroup vs. PT Indofood Sukses
Performance |
| Timeline |
| Citigroup |
| PT Indofood Sukses |
Citigroup and PT Indofood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and PT Indofood
The main advantage of trading using opposite Citigroup and PT Indofood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, PT Indofood 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 Indofood will offset losses from the drop in PT Indofood's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| PT Indofood vs. Superior Plus Corp | PT Indofood vs. SIVERS SEMICONDUCTORS AB | PT Indofood vs. Talanx AG | PT Indofood vs. 2G ENERGY |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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