Correlation Between Bank Negara and Bluesky Digital

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

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

Diversification Opportunities for Bank Negara and Bluesky Digital

-0.62

Correlation Coefficient

Bank Negara  Bluesky Digital

Excellent diversification

The 3 months correlation between Bank and Bluesky is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bank Negara Indonesia and Bluesky Digital Assets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bluesky Digital Assets and Bank Negara 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 Negara Indonesia are associated (or correlated) with Bluesky Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bluesky Digital Assets has no effect on the direction of Bank Negara i.e., Bank Negara and Bluesky Digital go up and down completely randomly.

Pair Corralation between Bank Negara and Bluesky Digital

Assuming the 90 days horizon Bank Negara is expected to generate 6.65 times less return on investment than Bluesky Digital. But when comparing it to its historical volatility, Bank Negara Indonesia is 2.81 times less risky than Bluesky Digital. It trades about 0.03 of its potential returns per unit of risk. Bluesky Digital Assets is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Bluesky Digital Assets on September 2, 2024 and sell it today you would earn a total of  26.00  from holding Bluesky Digital Assets or generate 185.71% return on investment over 90 days.

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

Bank Negara Indonesia  vs.  Bluesky Digital Assets

Bank Negara Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Negara Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Bank Negara is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bluesky Digital Assets

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bluesky Digital Assets are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Bluesky Digital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Negara and Bluesky Digital

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

The idea behind Bank Negara Indonesia and Bluesky Digital Assets 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.