Correlation Between Citigroup and Indonesia Fibreboard

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

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

Diversification Opportunities for Citigroup and Indonesia Fibreboard

0.82

Correlation Coefficient

Citigroup  Indonesia Fibreboard

Very poor diversification

The 3 months correlation between Citigroup and Indonesia is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Indonesia Fibreboard Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indonesia Fibreboard 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 Indonesia Fibreboard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indonesia Fibreboard has no effect on the direction of Citigroup i.e., Citigroup and Indonesia Fibreboard go up and down completely randomly.

Pair Corralation between Citigroup and Indonesia Fibreboard

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.25 times less return on investment than Indonesia Fibreboard. But when comparing it to its historical volatility, Citigroup is 1.67 times less risky than Indonesia Fibreboard. It trades about 0.09 of its potential returns per unit of risk. Indonesia Fibreboard Industry is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  14,152  in Indonesia Fibreboard Industry on September 20, 2024 and sell it today you would earn a total of  5,748  from holding Indonesia Fibreboard Industry or generate 40.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	93.98%
Values	Daily Returns

Citigroup  vs.  Indonesia Fibreboard Industry

Citigroup

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) 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.

Indonesia Fibreboard

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Indonesia Fibreboard Industry are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Indonesia Fibreboard 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 Indonesia Fibreboard

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

The idea behind Citigroup and Indonesia Fibreboard Industry 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 CEOs Directory module to screen CEOs from public companies around the world.