Correlation Between PT Bank and Sugarmade

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

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

Diversification Opportunities for PT Bank and Sugarmade

0.71

Correlation Coefficient

PT Bank  Sugarmade

Poor diversification

The 3 months correlation between BKRKF and Sugarmade is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Sugarmade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sugarmade and PT Bank 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 PT Bank Rakyat are associated (or correlated) with Sugarmade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sugarmade has no effect on the direction of PT Bank i.e., PT Bank and Sugarmade go up and down completely randomly.

Pair Corralation between PT Bank and Sugarmade

Assuming the 90 days horizon PT Bank is expected to generate 161.61 times less return on investment than Sugarmade. But when comparing it to its historical volatility, PT Bank Rakyat is 23.85 times less risky than Sugarmade. It trades about 0.02 of its potential returns per unit of risk. Sugarmade is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  0.03  in Sugarmade on September 28, 2024 and sell it today you would lose (0.02) from holding Sugarmade or give up 66.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	82.48%
Values	Daily Returns

PT Bank Rakyat  vs.  Sugarmade

PT Bank Rakyat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Bank Rakyat has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, PT Bank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Sugarmade

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sugarmade are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, Sugarmade exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bank and Sugarmade

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

The idea behind PT Bank Rakyat and Sugarmade 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.