Correlation Between Citigroup and Wilmar Cahaya

Can any of the company-specific risk be diversified away by investing in both Citigroup and Wilmar Cahaya 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 Wilmar Cahaya into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and Wilmar Cahaya Indonesia, you can compare the effects of market volatilities on Citigroup and Wilmar Cahaya 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 Wilmar Cahaya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Wilmar Cahaya.

Diversification Opportunities for Citigroup and Wilmar Cahaya

-0.42

Correlation Coefficient

Citigroup  Wilmar Cahaya

Very good diversification

The 3 months correlation between Citigroup and Wilmar is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Wilmar Cahaya Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmar Cahaya Indonesia 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 Wilmar Cahaya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmar Cahaya Indonesia has no effect on the direction of Citigroup i.e., Citigroup and Wilmar Cahaya go up and down completely randomly.

Pair Corralation between Citigroup and Wilmar Cahaya

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.68 times more return on investment than Wilmar Cahaya. However, Citigroup is 1.48 times less risky than Wilmar Cahaya. It trades about 0.19 of its potential returns per unit of risk. Wilmar Cahaya Indonesia is currently generating about 0.01 per unit of risk. If you would invest  6,900  in Citigroup on September 18, 2024 and sell it today you would earn a total of  212.00  from holding Citigroup or generate 3.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Wilmar Cahaya Indonesia

Citigroup

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Wilmar Cahaya Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wilmar Cahaya Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Wilmar Cahaya is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Citigroup and Wilmar Cahaya

The main advantage of trading using opposite Citigroup and Wilmar Cahaya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Wilmar Cahaya 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 Wilmar Cahaya will offset losses from the drop in Wilmar Cahaya's long position.

The idea behind Citigroup and Wilmar Cahaya Indonesia 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.

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.