Correlation Between Citigroup and Logindo Samudramakmur

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

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

Diversification Opportunities for Citigroup and Logindo Samudramakmur

0.54

Correlation Coefficient

Citigroup  Logindo Samudramakmur

Very weak diversification

The 3 months correlation between Citigroup and Logindo is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Logindo Samudramakmur Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logindo Samudramakmur 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 Logindo Samudramakmur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logindo Samudramakmur Tbk has no effect on the direction of Citigroup i.e., Citigroup and Logindo Samudramakmur go up and down completely randomly.

Pair Corralation between Citigroup and Logindo Samudramakmur

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.38 times less return on investment than Logindo Samudramakmur. But when comparing it to its historical volatility, Citigroup is 2.72 times less risky than Logindo Samudramakmur. It trades about 0.16 of its potential returns per unit of risk. Logindo Samudramakmur Tbk is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  9,400  in Logindo Samudramakmur Tbk on September 18, 2024 and sell it today you would earn a total of  2,000  from holding Logindo Samudramakmur Tbk or generate 21.28% return on investment over 90 days.

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

Citigroup  vs.  Logindo Samudramakmur Tbk

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.

Logindo Samudramakmur Tbk

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Logindo Samudramakmur Tbk are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Logindo Samudramakmur disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Logindo Samudramakmur

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

The idea behind Citigroup and Logindo Samudramakmur 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.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.