Correlation Between Citigroup and Multi Indocitra
Can any of the company-specific risk be diversified away by investing in both Citigroup and Multi Indocitra 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 Multi Indocitra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Multi Indocitra Tbk, you can compare the effects of market volatilities on Citigroup and Multi Indocitra 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 Multi Indocitra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Multi Indocitra.
Diversification Opportunities for Citigroup and Multi Indocitra
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and Multi is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Multi Indocitra Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Indocitra 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 Multi Indocitra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Indocitra Tbk has no effect on the direction of Citigroup i.e., Citigroup and Multi Indocitra go up and down completely randomly.
Pair Corralation between Citigroup and Multi Indocitra
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.43 times more return on investment than Multi Indocitra. However, Citigroup is 2.43 times more volatile than Multi Indocitra Tbk. It trades about 0.25 of its potential returns per unit of risk. Multi Indocitra Tbk is currently generating about 0.08 per unit of risk. If you would invest 6,360 in Citigroup on August 28, 2024 and sell it today you would earn a total of 715.00 from holding Citigroup or generate 11.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Multi Indocitra Tbk
Performance |
| Timeline |
| Citigroup |
| Multi Indocitra Tbk |
Citigroup and Multi Indocitra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Multi Indocitra
The main advantage of trading using opposite Citigroup and Multi Indocitra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Multi Indocitra 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 Multi Indocitra will offset losses from the drop in Multi Indocitra's long position.The idea behind Citigroup and Multi Indocitra Tbk 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.| Multi Indocitra vs. Lautan Luas Tbk | Multi Indocitra vs. Pembangunan Jaya Ancol | Multi Indocitra vs. Modern Internasional Tbk | Multi Indocitra vs. Mustika Ratu Tbk |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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