Correlation Between BANK RAKYAT and Citigroup

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

By analyzing existing cross correlation between BANK RAKYAT IND and Citigroup, you can compare the effects of market volatilities on BANK RAKYAT and Citigroup 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 BANK RAKYAT with a short position of Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK RAKYAT and Citigroup.

Diversification Opportunities for BANK RAKYAT and Citigroup

-0.8

Correlation Coefficient

BANK RAKYAT  Citigroup

Pay attention - limited upside

The 3 months correlation between BANK and Citigroup is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and BANK RAKYAT 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 BANK RAKYAT IND are associated (or correlated) with Citigroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citigroup has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and Citigroup go up and down completely randomly.

Pair Corralation between BANK RAKYAT and Citigroup

Assuming the 90 days trading horizon BANK RAKYAT IND is expected to under-perform the Citigroup. In addition to that, BANK RAKYAT is 1.76 times more volatile than Citigroup. It trades about -0.21 of its total potential returns per unit of risk. Citigroup is currently generating about 0.2 per unit of volatility. If you would invest  6,510  in Citigroup on September 15, 2024 and sell it today you would earn a total of  267.00  from holding Citigroup or generate 4.1% return on investment over 90 days.

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

BANK RAKYAT IND  vs.  Citigroup

BANK RAKYAT IND

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANK RAKYAT IND has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Citigroup

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BANK RAKYAT and Citigroup

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

The idea behind BANK RAKYAT IND and Citigroup 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.