Correlation Between Citigroup and Berjaya Food

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

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

Diversification Opportunities for Citigroup and Berjaya Food

0.06

Correlation Coefficient

Citigroup  Berjaya Food

Significant diversification

The 3 months correlation between Citigroup and Berjaya is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Berjaya Food Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berjaya Food Bhd 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 Berjaya Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berjaya Food Bhd has no effect on the direction of Citigroup i.e., Citigroup and Berjaya Food go up and down completely randomly.

Pair Corralation between Citigroup and Berjaya Food

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.48 times more return on investment than Berjaya Food. However, Citigroup is 2.07 times less risky than Berjaya Food. It trades about 0.14 of its potential returns per unit of risk. Berjaya Food Bhd is currently generating about -0.03 per unit of risk. If you would invest  6,092  in Citigroup on September 3, 2024 and sell it today you would earn a total of  1,047  from holding Citigroup or generate 17.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Citigroup  vs.  Berjaya Food Bhd

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.

Berjaya Food Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Berjaya Food Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Citigroup and Berjaya Food

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

The idea behind Citigroup and Berjaya Food Bhd 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.