Correlation Between Citigroup and Sekar Bumi
Can any of the company-specific risk be diversified away by investing in both Citigroup and Sekar Bumi 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 Sekar Bumi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Sekar Bumi Tbk, you can compare the effects of market volatilities on Citigroup and Sekar Bumi 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 Sekar Bumi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Sekar Bumi.
Diversification Opportunities for Citigroup and Sekar Bumi
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Citigroup and Sekar is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Sekar Bumi Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekar Bumi 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 Sekar Bumi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sekar Bumi Tbk has no effect on the direction of Citigroup i.e., Citigroup and Sekar Bumi go up and down completely randomly.
Pair Corralation between Citigroup and Sekar Bumi
Taking into account the 90-day investment horizon Citigroup is expected to generate 3.99 times less return on investment than Sekar Bumi. But when comparing it to its historical volatility, Citigroup is 3.97 times less risky than Sekar Bumi. It trades about 0.16 of its potential returns per unit of risk. Sekar Bumi Tbk is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 31,600 in Sekar Bumi Tbk on September 18, 2024 and sell it today you would earn a total of 27,400 from holding Sekar Bumi Tbk or generate 86.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Citigroup vs. Sekar Bumi Tbk
Performance |
Timeline |
Citigroup |
Sekar Bumi Tbk |
Citigroup and Sekar Bumi Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Citigroup and Sekar Bumi
The main advantage of trading using opposite Citigroup and Sekar Bumi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Sekar Bumi 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 Sekar Bumi will offset losses from the drop in Sekar Bumi's long position.Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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